Subrogation is a concept whereby an insurance company exercises its right to seek reimbursement from the party responsible for an accident. Subrogation can seem harsh when there are is a small settlement or award, because it provides for an insurance company to be repaid before any money or benefits can be paid to an individual. Each state, such as Illinois, has different subrogation laws and deadlines by which an action must be brought.
What is Subrogation?
If you are in an accident and you are not at fault, but you must make a claim on your insurance, your insurance company may be entitled to reimbursement for the claims that were paid. That reimbursement would come directly from the party at fault or that person’s insurance policy. Subrogation is only available if the insurance company’s customer is not at fault. Moreover, subrogation can apply with respect to any type of insurance ranging from healthcare to car insurance to workers’ compensation.
What is a Statute of Limitations?
A statute of limitations is a law that prevents the filing of a lawsuit after a certain period of time. Once that time limit has passed, lawsuits may not be commenced unless there is an applicable legal exception. The rationale for statutes of limitations is to encourage individuals to file lawsuits in a timely manner so that they can be effectively litigated when evidence and memories are fresh.
Illinois Subrogation Statute of Limitations
The statute of limitations for subrogation actions in Illinois is two years. This means that a company must file a subrogation claim within two years from the date of the injury. If a lawsuit is not filed within that time, the lawsuit will be time barred. This means that if a lawsuit is filed, the judge will likely throw the case out because it did not meet the statute of limitations unless there is an exception that applies.
Statute of Limitations Exceptions
There is a small exception to the two-year statute of limitations where the limitations period is extended if there are damages resulting from a first-degree murder or commission of certain felonies, and the person responsible for such crime is convicted and incarcerated. The limitations period is tolled until the end of the incarceration period or until the criminal prosecution has been adjudicated.
Kay Lee began freelance writing for Answerbag and eHow in 2010. She is an attorney in Washington, DC, practicing since 2006. Lee specializes in employee benefits and executive compensation. She holds a Juris Doctor from the Columbus School of Law and a Master of Laws from Georgetown University Law Center.