Washington adheres to the Made Whole Doctrine. Mattson On Behalf of Mattson v. Stone, 648 P.2d 929 (Wash. App. 1982); Mahler v. Szucs, 957 P.2d 632 (Wash. 1998). An injured party must be made whole before the injured party’s insurer may require the injured party to reimburse the insurer for a subrogation or reimbursement claim. Skiles v. Farmers Ins. Co., Inc., 814 P.2d 666 (Wash. App. 1991). Known as the Thiringer Doctrine, the general rule is that while an insurer is entitled to be reimbursed to the extent that its insured recovers payment for the same loss from the tortfeasor responsible for his damage, it can recover only the excess which the insured has received from the wrongdoer, remaining after the insured is fully compensated for his loss. Thiringer v. American Motorist Co., 588 P.2d 191 (Wash. 1978). However, the Thiringer case indicates the Thiringer Doctrine may be overridden by specific Plan or policy language to the contrary. Id. In order to determine if the insured is “made whole”:

The proceeds of the settlement should be applied first toward the payment of the insured’s general damages and then, if any excess remained, toward the payment of his special damages covered by the PIP provision. The principle upon which this holding was based was that the insured was entitled to be made whole, and that only after he had made a full recovery for his damages did the insurer’s right of subrogation arise.

The insurance policy in Thiringer reserved to the insurer a right of subrogation and provided that the insured should do nothing to prejudice such right. The Supreme Court agreed with the trial court’s conclusion that in the context of a general settlement involving automobile personal injury protection the proceeds should be first applied toward the payment of the insured’s general damages and then, if any excess remains, toward the payment of the special damages covered by personal injury protection insurance.

An insured may be considered fully compensated by a less-than-limits settlement with a tortfeasor, despite reduction of its final recovery by his attorney’s fees, where he has settled with full knowledge of his obligation to pay fees, and thus he had an obligation to reimburse his insurer for its subrogated interest. Peterson v. Safeco Ins. Co. of Ill., 976 P.2d 632 (Wash. App. 1999). It also appears an insured must only be made whole for the particular category of damages being sought by the insurance company, in order to allow the insurance company’s subrogation rights. Mahler, supra. The property damage subrogation does not relate to the right of reimbursement for personal injuries under the policy.

Disputes between insureds and subrogating carriers with regard to the Made Whole Doctrine are resolved on a case-by-case basis upon a consideration of “the equitable factors involved, guided by the principle that a party suffering compensable injury is entitled to be made whole but should not be allowed to duplicate his recovery.” Leader Nat’l Ins. Co. v. Torres, 779 P.2d 722, 723 (Wash. 1989). Washington law provides a number of factors to be considered when resolving a subrogation or reimbursement dispute between an insurer and its insured where the insured executes a general release with the tortfeasor: (1) knowledge of insureds and tortfeasors as to outstanding subrogation claims; (2) extent of the prejudice to insurer’s subrogation interests; (3) desirability of encouraging settlements; (4) possibility of sharp practices by tortfeasors, insureds or their insurance carriers; and (5) general public policy that persons suffering compensable injuries are entitled to be made whole. Torres, supra. While the insured is entitled to recoup his general damages from the tortfeasor before subrogation is permitted, in doing so it may not do anything to prejudice the rights of the insurer. B.C. Ministry of Health v. Homewood, 970 P.2d 381, 386 (Wash. Ct. App. 1999) (concluding that general settlement involving health insurance should be apportioned first to general damages and then any excess to special damages). As explained by the court of appeals in British Columbia Ministry of Health v. Homewood:

[T]o establish prejudice [the insurer] must show (1) the percentage of negligence of [each of three tortfeasors]; (2) the total losses the plaintiff suffered; [and] (3) that the settlement as a percentage of plaintiff’s total injuries was less than the percentage of the settling entities’ comparative negligence. Only if the latter percentage exceeds the former will [the insurer’s] subrogation rights have been prejudiced…. Homewood, supra.

The holding in Thiringer was also construed by the Court of Appeals in Fisher to allow the parties to the contract to modify subrogation standards developed at common law. Fisher v. Aldi Tire, Inc., 902 P.2d 166 (Wash. App. 1995). However, the language purporting to change the common law standards must be clear and unambiguous.

A self-insured retention (SIR) of $100,000 paid by an insured under a CGL policy does not constitute “primary insurance” for purposes of subrogation, according to the Washington Court of Appeals. Bordeaux, Inc. v. American Safety Ins. Co, 186 P.3d 1188 (Wash. App. 2008). Therefore, the CGL carrier was not be entitled to any portion of a third-party subrogation recovery unless and until the insured was “made whole” under Thiringer for the SIR payment it had made.