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What you need to know about workers’ compensation subrogation

Before modern workers’ compensation laws were implemented, employees who were injured on the job had to sue the business owners if they wanted to receive any support or compensation. While current California laws force employers to provide insurance for onsite accidents that result in injuries, changes have also been made to reduce the ability of others to enter into a lawsuit over the incident.

 

Chron.com reports that workers’ compensation insurance contracts in today’s business world include a clause called a waiver of subrogation. This legal agreement means that, in the event of an accident, nobody will be allowed to sue a third party for damages. The clause can protect the named parties from being sued by another party seeking reimbursement. In other industries that lack subrogation waivers, insurance companies are able to sue outside parties who hold responsibility for the loss and damages. By establishing the clause, employers are protected from this situation.

 

One example that could happen if policies have the right of subrogation involves the insurance company seeking compensation. If an employee is injured and receives payments, the insurance provider could technically sue a third party who was responsible for the accident, whether that be the employer or another person, to recover the lost money.

 

If the business owner has chosen to self-insure employees and pay for all injuries, a waiver of subrogation will not be necessary. The State Compensation Insurance Fund of California allows employers who have coverage through them to use a blanket waiver of subrogation that will cover many situations and eliminate the need of business owners to contact the provider and secure a waiver for each injury.

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