Subrogation Not On Radar Screens In Work Comp Files
The topic of subrogation is one of the most misunderstood areas in insurance, and especially Workers Compensation, that we see costing insureds millions of dollars a year.
Subrogation: Prevents the insured from collecting loss payments from his or her insurer and additionally from the responsible third party for the same loss. Once the insurer pays a loss caused by a third party, the insurer takes over or is subrogated to the insured’s common-law right of action against the negligent third party.
What does this mean to the employers? If there are any accidents where another party is responsible (critical – or even partially responsible) for an on-the-job injury, your Workers’ Comp carrier should be pursuing funds from the third party’s insurance carrier. This is one area where we see so much of the employer’s money go down the drain.
Unfortunately, with the specialization of the various lines of insurance adjusting, many WC adjusters do not have the specialized liability training to spot and pursue any type of subrogatable funds.
We have always recommended that independent adjusting agencies, TPAs, and insurance carriers train their adjusters in other lines besides WC. The Associate in Claims (AIC) is perfect for training in other lines of claims.
Two Questions to Ask Your Workers Comp Adjuster
There are two questions that you will need to ask the Workers Comp adjuster who is adjusting the file.
- Have you sent a notice letter to the carrier of the negligent third party, and may I have a copy of that letter?
- What is the status of the subrogation lien?
There is a much longer list of questions, but these are the two basic ones that a Workers Comp employer should be asking often if there is a possible lien on the file.
There are time limits for giving a third-party insurance carrier notice. The Workers Comp adjuster may be absorbed into the Workers Compensation file and may have overlooked putting the third-party carrier on notice. Any amounts recovered by your Workers Compensation carrier must be immediately entered into the file. Almost all Workers Comp adjusters do not have a background in Auto, Premises, General, or other types of liability coverages.
There are quite a few tricks and traps in Subrogation. Remember, when the Workers Comp Adjuster’s lien is negotiated down, that is your money that is being lost. Not following the subrogation of your Workers Comp lien can ruin a great avenue to recover funds that will bring down your E-Mod.
Subrogation is one area where I recommend that you use an adjusting expert. Subrogation can be very complicated and confusing even to the adjuster that is on the file. We have had to assist the Workers Comp adjuster on quite a few claims in recovering the funds from a third-party liability carrier. The largest one we have had so far is over $1 million.
Next Up – Another definition from www.cutcompcosts.com/definitions.html A list of free definitions that you can download.
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