4. If I have received compensation from personal injury litigation against the wrongdoer, will it be used to set off part of my claim from my insurance policy?
There should be a "subrogation" clause which is also a standard term in an insurance policy.
Under this clause, if your insurance company has already paid your claim, your rights and remedies are "subrogated". In simple words, the insurance company is placed in your position and takes over all of your rights and claims against the defaulting party. Note that your insurance company can only exercise the right of subrogation if it has admitted and paid your claim under your insurance policy.
According to the facts in the above question, you have in effect exercised your rights and have already obtained compensation from the wrongdoer. In this case, the compensation may be offset against the liability of your insurance company under the policy it has issued to you.
Example : You have obtained $20,000 as compensation from the defaulting party via personal injury proceedings. However, your insurance company should pay you $40,000 according to your insurance policy. Since you have already received $20,000 from the wrongdoer, you will only get $20,000 from the insurance company.
The principle of subrogation is to prevent the insured persons from making a profit out of their insurance policies.
For details about personal injury litigation, please go to another topic – Personal Injuries.