Sobrogation . . . a word unrecognized by my spellchecker and unfamiliar to most people not in the insurance industry. As a workers’ compensation claims adjuster, I explain the concept frequently.
First I’ll refer to Webster, defining subrogation as “the assumption by a third party (as a second creditor or an insurance company) of another’s legal right to collect a debt or damages.”
Clear enough (I guess), but I think an example best brings the concept to life. . . .
An employee diligently at work at her desk, typing away, drops 12 inches or so and then falls backwards, hitting her head on the hard floor. She receives medical attention and takes time off from work to recover, all of which her company’s workers’ compensation insurer covers. One’s natural reaction might be: chairs don’t typically spontaneously collapse. Upon further investigation, the insurance company finds the chair collapsed as a result of a known defect in that particular model, and the chair manufacturer pays for the losses. Subrogation has transpired.
So why should you care about this concept? Fair question.
As usual, my answer to the “why should I care?” question is “because it saves you money.”
If another company or individual is ultimately responsible for your loss as an employer and policyholder, the at-fault party should pay, in which case, your claims experience (and your insurance premium) can go unaffected.
How can you help with this process? Very simply: just be honest and thorough in your description of the incident. Help the adjuster in filling in any gaps. In other words, provide any video footage that may have been captured by your surveillance cameras, record the contact information for any eye witnesses, take pictures that might be helpful (e.g., the broken chair in my hypothetical), etc. The more information you can provide, the better. Then, let your insurance company take over!