• Coronavirus
  • Blog
  • Careers
  • Contact Us
The Safegard Group, Inc.
  • 1 (888) 892-7688
The Safegard Group, Inc.
  • Client Login
    • Commercial & Personal
    • Employee Benefits
  • Property and Casualty
    • M&A Services
  • Employee Benefits
    • Medical Funding Strategies
    • Technological Capabilities
    • Employee Education
    • Voluntary Benefits
  • Personal Insurance
    • Carrier Claims Reporting

Subrogation & Recovering Costs

30
Nov, 2017
Lisa Hale, Vice President - Claims & RiskBy Lisa Hale, Vice President - Claims & Risk
Subrogation & Recovering Costs
  • Claims & Risk Management
  • No comments

An insurance policy, no matter what is being covered, is a contract between the insurance company and the party that wants protection. When a policy involves liability coverage, the contract, essentially, means that the insurance company will handle losses (injuries to other people and/or loss or damage to property that belongs to others). However, eligible losses are restricted to those that are the policyholder’s legal responsibility. There are many times that a loss is settled under a liability policy; but someone else may actually be responsible. Consider an example of subrogation:

Jon and Jenny are new to a neighborhood. A month after moving in, they throw a huge party and invite all of their neighbors. One of the activities is volleyball and they set up a net and space to play in their backyard.

The neighbors know each other well and they are quite competitive. During one game, an accident happens. Glen is injured while trying to block a ball at the net. The injury is very serious and Glen ends up paralyzed. He sues Jon and Jenny for his substantial medical costs and Jon and Jenny’s insurance company settles the loss.

Later, it is discovered that Paul, who was on the opposing volleyball team, had grabbed and pulled Glen when they were battling at the net, causing Glen to lose his balance and fall. Jon and Jenny’s insurance company learns of this and they sue Paul to recoup the money they paid for the loss.

The effort to recover payment made by Jon and Jenny’s insurance company illustrates “subrogation” an essential insurance policy provision. It is a legal right that allows the insurance company to take over a right held by their policyholder. Once an insurance company claims this right, it can pursue recovery from another person (including other entities such as partnerships or corporations) who is actually responsible for a loss.

Preserves Policy Intent

The purpose of any insurance policy is to restore a party’s financial position after an accidental loss. However, many losses are directly caused by some person or party’s actions. An insurance company may pay for a loss and then take a next step, use of subrogation. It allows them to take over the policyholder’s legal right and pursue repayment from a party that is legally responsible for a loss occurring. This helps maintain the intent of insurance policies to respond to accidents rather than to pay more injury or damage that can be attributed to another. The public good is served by making sure that those parties who cause losses are held accountable.

Controls Insurance Cost

Insurers who practice subrogation, recovering payments that they have paid out in claims, they benefit policyholders. Reductions in claims payments minimizes the need to raise insurance premiums. This makes insurance more efficient and affordable.

Subrogation Assists with Insurer Profitability

Insurance companies that are profitable are ones that can continue providing insurance protection. Profitability is created in several ways. First is to make money by properly evaluating the business it agrees to insure. Securing more premiums than it pays out in losses is called underwriting profit. Second, insurers make proper investments of some of its funds. Investment profit is another source of income. Unknown to many, subrogation is the next major method for an insurance company to be successful. Every dollar a company recovers through subrogation goes directly to its bottom line.

Subrogation is so important that policyholders are required to protect their right to subrogation. A policyholder may not waive the right without an insurance company’s written permission. Further, a policyholder that harms (also known as prejudicing) that right could face severe consequences.

The Safegard Group works through the subrogation process to save our clients thousands of dollars every year, learn more about our claims management efforts by clicking here.

Share this:

  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to print (Opens in new window)

Related

Lisa Hale, Vice President - Claims & Risk

About Lisa Hale, Vice President - Claims & Risk

Leave a Reply Cancel reply

Categories

  • Claims & Risk Management (141)
  • Company News (73)
    • Designations (2)
    • New Hires (27)
    • Press Release (17)
    • Website (1)
  • Employee Benefits (76)
  • Personal Lines (61)
  • Property & Casualty (154)
  • White Papers (3)
    • Property & Casualty (3)

Recent Posts

  • Gambling in the Workplace December 31, 2019
  • Return to Work Program December 26, 2019
  • The Benefits of Upskilling December 24, 2019
  • Manage Cost of Risk, Control Price December 19, 2019
  • Liability from On-site Fitness Center December 17, 2019

Top Posts

  • Health Plan Rules: Treating Employees Differently
    Health Plan Rules: Treating Employees Differently
  • Amazon Purchases with Your HSA or FSA
    Amazon Purchases with Your HSA or FSA
  • Building Trust and Confidence in Senior Leadership
    Building Trust and Confidence in Senior Leadership
  • Warehouse Housekeeping to Improve Safety
    Warehouse Housekeeping to Improve Safety
  • Underwriting Considerations for D&O Insurance
    Underwriting Considerations for D&O Insurance
  • Understanding Total Cost of Risk (TCOR)
    Understanding Total Cost of Risk (TCOR)
  • 5 Ways to Prevent Workplace Harassment
    5 Ways to Prevent Workplace Harassment
  • Working Alone and Employee Safety
    Working Alone and Employee Safety
  • Commercial Property Insurance Rating
    Commercial Property Insurance Rating
  • Pennsylvania Anti-Indemnification Statute
    Pennsylvania Anti-Indemnification Statute
  • @safegardgroup Planning to move? Get 30 things to do for 30 days to help make your move easier. https://t.co/pImf1Fj4DU https://t.co/Kl7PLxG5gd by The Safegard Group

    August 7, 2020
  • @safegardgroup Do you know the signs of heat exhaustion? Here are important guidelines to learn how to spot it, prevent it and hel… https://t.co/IHGBWhths8 by The Safegard Group

    August 5, 2020
  • @safegardgroup Increasing your following distance during heavy rain can help keep you safer. Get more safe driving tips:… https://t.co/inKj5IP7lO by The Safegard Group

    August 3, 2020
  • @safegardgroup Use this checklist as a guide when selecting a contractor for your next home renovation. https://t.co/hyLFpwt9Un https://t.co/3konDQs0li by The Safegard Group

    July 31, 2020
  • @safegardgroup Thinking about solar power for your home? Here are a few things to consider before installation:… https://t.co/S2XQAh9VzK by The Safegard Group

    July 29, 2020
  • @safegardgroup Hitting the road this summer? Consider the following tips to help avoid work zones. Share them with your friends an… https://t.co/6kVw4GojnX by The Safegard Group

    July 27, 2020
  • @safegardgroup Moving? Use this three-step packing process from Travelers for a smoother transition to your new home. #ThinkSafe… https://t.co/LhWADcYjX0 by The Safegard Group

    July 24, 2020
  • @safegardgroup Going on vacation? Here are some basic home security steps you can take to help create a secure environment while y… https://t.co/nnSacDWSrk by The Safegard Group

    July 22, 2020
  • @safegardgroup Are you ready to enjoy your time by the pool? Don’t forget the pool safety tips. Share them with your friends & fam… https://t.co/NgwJptoT3M by The Safegard Group

    July 20, 2020
  • @safegardgroup Trying to find the right home inspector? Here are some questions from Travelers to ask potential candidates… https://t.co/r16ZcJDCZA by The Safegard Group

    July 17, 2020
  • @safegardgroup Thunderstorms can strike with little to no warning, bringing dangerous lightning. Do you know how to react if you’r… https://t.co/BbYMxMhjaP by The Safegard Group

    July 15, 2020
  • @safegardgroup Ready to enjoy your fire pit? Read these safety tips to help avoid injury and damage to your home.… https://t.co/LNIZ5n4jKo by The Safegard Group

    July 13, 2020
  • @safegardgroup Getting ready to buy your first home? Here’s a handy first-time home buyer checklist from Travelers to help.… https://t.co/uPP91Yq9Kx by The Safegard Group

    July 10, 2020
  • @safegardgroup You can play an important role to help keep your passengers safer. Learn how and share these tips with your friends… https://t.co/Npw0IElOYa by The Safegard Group

    July 8, 2020
  • @safegardgroup Start preparing your home, inside and out, before a storm is even in the forecast. Share these hurricane prep tips… https://t.co/AHWdej3K15 by The Safegard Group

    July 6, 2020
  • @safegardgroup Wondering where to start when it comes to decluttering your home for sale? Here are 5 steps to help make the proces… https://t.co/FhimHXBBo6 by The Safegard Group

    July 3, 2020
  • @safegardgroup Many trees and shrubs are in full bloom and could be hiding spots for thieves. Consider these home security tips to… https://t.co/sTa2kYG6KW by The Safegard Group

    July 1, 2020
  • @safegardgroup Follow these pool safety tips to help provide a fun and safe environment for everyone. https://t.co/5YyEllpYaa… https://t.co/Cpl7JpvoTg by The Safegard Group

    June 29, 2020
  • @safegardgroup A tire blowout can be frightening and potentially dangerous. Staying calm is the first step. Get tips on what you c… https://t.co/7FNMXZqyju by The Safegard Group

    June 27, 2020
  • @safegardgroup Decluttering your garage can help make your property more attractive to prospective home buyers. Here’s a… https://t.co/H70eh0cWok by The Safegard Group

    June 26, 2020

Subscribe to our Newsletter

By subscribing to our mailing list you will get the latest news from us.

Latest Posts

  • Gambling in the Workplace December 31, 2019
  • Return to Work Program December 26, 2019
  • The Benefits of Upskilling December 24, 2019

Contact

  • The Safegard Group, Inc.
    100 Granite Drive, Suite 205
    Media, PA 19063
  • Phone: 1 (888) 892-7688
    Fax: (610) 892-7695
  • eassistant@safegardgroup.com

Follow Us

© 2020 The Safegard Group, Inc.