Ask the Experts: Subrogation

What does “subrogation” mean and how does it affect my district?

If you have ever filed an insurance claim, whether it was due to a car accident or loss to your home, or something that happened at your district, you may have heard of the term “subrogation.”

Subrogation refers to the act of substituting one thing for another. In the case of a covered loss, it means substituting one person (a third party found to be at fault) for another person (the original covered party). For example if your car was rear-ended and it was later shown that you were not responsible, your insurance company would pay for your initial losses (such as the repair of your automobile and medical bills) and then take action to recuperate any payment made.

This happens more than you think, and it doesn’t always get caught in time to ensure the right people are held financially responsible. Over the last five years, the CSD Pool has paid out millions of dollars in claims. Our claims administration team has been successful at recovering just under $450,000 by finding other parties who may be partially or totally responsible for the loss.

Damage to district vehicles by third parties and property damage by third-party vehicles are common types of subrogated claims. In these types of incidents it is easy to identify who is at fault unless it was a hit-and-run. Every district needs to file a police report and take lots of pictures, no matter whether the loss was a result of a routine traffic accident or vandalism. In these types of situations, preserving the evidence is incredibly important. The worst thing you can do is send a crew in to clean up the area before a proper investigation, including photos and police reports, has been conducted. You do not want to throw away all of your evidence.

Water damage is yet another potential subrogation situation that is not quite so obvious, and can affect a constituent’s property or property owned by the district. Several Pool members have experienced this type of incident in the past, and in those cases it was determined that the seal in a meter had failed because of faulty workmanship from the manufacturer. The Pool was able to recover funds from the manufacturer at fault due to diligent claims handling.

Recovery involving workers’ compensation subrogation is not always black and white, and can be tough to determine. Slips, trips, and falls are the CSD Pool’s number one cause of loss for workers’ compensation, and these claims require thorough investigations. During your investigation, you need to dig into the root cause, which can help you discover the potential for subrogation. If an employee slipped because a third-party contractor spilled a slick substance in the parking lot before leaving, there is potential for subrogation. If you are renting your office building and the owner is responsible for keeping the walkways clear of ice and failed to do so, there may be a potential subrogation claim.

Workers’ compensation claims can carry numerous costs, including medical fees and even disability payments. A successful subrogation of a workers’ compensation claim could recover these fees, allowing the district to avoid adding that loss to their history. The more information that is provided about a claim, the greater the chance a subrogation can occur. This will pay dividends to your district’s bottom line.

Our claims adjusters are very knowledgeable when it comes to identifying potential subrogation, but they still need your help to investigate these incidents. This ultimately saves you money, saves the CSD Pool money, and helps everyone’s bottom line. Julie Zimmerman says, “The district gets credit for recovery and it will reduce the claims cost and can affect future renewal premiums by showing a reduced loss ratio.”