What Is Workers’ Comp Subrogation?
If you’re a business owner or HR manager, workers’ compensation is crucial no matter how many employees you have. Workers’ comp helps protect your employees from financial strain if they get injured at work or suffer an illness due to their job. In addition to protecting your workers, however, workers’ compensation insurance also protects you and your company from losing money if someone gets hurt on the job.
So what if there was another factor that could have led to an injury at work? In some cases, employees can become injured due to things like defective machinery or getting into a car accident that was the fault of another driver. In these circumstances, workers’ comp providers may attempt to make their money back from the third party entity who may have been at fault for the accident—the process of subrogation.
Let’s take a look at how subrogation works in workers’ compensation claims, the role of employer and insurance providers in subrogation, legal consideration and compliance requirements, and how subrogation helps reduce workers’ comp costs.
How Subrogation Works in Workers’ Compensation Claims
Understanding the process of subrogation is critical for cost recovery and compliance as an employer. When an employee is injured at work, they’ll report the accident and file a claim with the workers’ compensation insurance company. The workers’ comp provider then pays the claim to the employee who was injured.
If the accident happened due to negligence on the part of a third party, however, the employee may file a personal injury claim against who they believe was at fault. This means the workers’ comp provider could have a claim for subrogation, ultimately seeking reimbursement from that third party for the amount they paid out to the injured worker.
The Role of Employers and Insurance Providers in Subrogation
Subrogation has its benefits for both employers and insurance providers alike, and they typically work together throughout the process. An insurance provider can file a subrogation claim after investigating an accident and identifying possible at-fault third parties.
When this happens, there isn’t much that can be done as a business owner or HR manager other than ensuring the incident has been properly documented. Employers can help insurance providers by offering additional details about the accident that may help demonstrate who truly was at fault. Any information or evidence an employer has about how the injury occurred can help their workers’ comp provider with the subrogation process.
Legal Considerations and Compliance Requirements
Legal considerations and compliance requirements are important to keep in mind as a business owner or insurance professional. It’s imperative that the insurance provider thoroughly documents the entire subrogation process. They must also notify the third party that they’re pursuing subrogation and seeking reimbursement for the amount they covered. It’s also important to note that the subrogation process may have varying rules and regulations from state-to-state, so insurance companies should be well-versed in the legal requirements in their area.
How Subrogation Helps Reduce Workers’ Comp Costs
Subrogation can actually be beneficial for employers, as it can help reduce their workers’ compensation costs. When insurance providers seek reimbursement from third party entities that may have been at fault, the financial burden shifts away from the workers’ comp provider. When the financial burden shifts, it can ultimately help reduce premium costs for the employer.
Leveraging Subrogation for Financial Protection
Leveraging subrogation for financial protection is possible as a business owner or HR manager. First and foremost, it’s crucial to be meticulous about workers’ compensation claims. If a third-party entity was at fault, it’s imperative that any details or note regarding that be documented.
Workers’ compensation insurance is put in place to protect employees in the event of an injury at work. However, if the injury was ultimately caused by a negligent third party and your insurance provider is reimbursed, you could be looking at lower premiums going forward. If you own a business or manage an HR department, report accidents right away and be as thorough with your documentation as possible.
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