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Legal Terms – Personal Injury

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Legal Terms – Subrogation vs. Lien

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Subrogation

  • Definition: Subrogation is a legal principle that allows an insurance company to pursue a third party that has caused a loss to the insured party. After the insurer pays the insured for their loss, it gains the right to step into the insured’s shoes and seek compensation from the responsible party.
  • Purpose: It helps insurers recover the amount they paid out for claims, ensuring that the responsible party ultimately bears the financial burden.
  • Example: If you get into an accident caused by another driver, your insurance covers your damages. After paying you, the insurance company can sue the other driver to recover its payment.

Lien

  • Definition: A lien is a legal right or claim against an asset typically used as collateral to satisfy a debt. It gives the creditor a right to take possession of the asset if the debtor fails to fulfill their obligations.
  • Purpose: Liens protect creditors by ensuring they have a legal claim on a debtor’s property until the debt is paid off.

Example: A Hospital lien, if it is properly filed and proper notice given, including other legal processes, has been filed, you have to pay back the lien.

In Summary

  • Subrogation
    It involves one party stepping into another’s shoes to recover costs after a loss.
  • Lien
    Refers to a claim against an asset to secure debt repayment.

Mediation

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Under Insured Motorist Coverage

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