Scroll down for a discussion on Insurance Companies and Claim Payment within the Auto Insurance Forum.
I view several insurance and financial forums and review the insurance questions. A comment that almost always comes up is the following:
"The insurance company ...
I view several insurance and financial forums and review the insurance questions. A comment that almost always comes up is the following:
"The insurance company will try to pay as little as possible on the claim".
People seem to be shocked and hold this against the carrier. I understand their frustration but I don't know that they are really considering the "big picture".
We are speaking of an insurance company. It's a business. Just like any other business, it exists to make money. Is there any business that does not spend as little as possible in order to return a larger profit? Almost all insurance companies are not privitly held, that is, they have investors that they need to answer too.
I understand that most people don't think of an insurance company as a business but it is just that. But insurance companies also play a major role in keeping commerce working. Without insurance policies, commerce would quickly screech to a sudden stop.
It's also ironic that people can have such a different piont of view about the way a claim is handled. When I'm addressing a claim and my insured thinks the other person is at fault, they don't want their carrier to pay a dime and even spend thousands of dollars to defend that $200 property damage loss. But when the same person needs to collect from an insurance company, they justw want to blindly pay the loss without even looking into the matter.
Don't get me wrong... I certainly understand why people don't like that insurance companies don't want to pay out money but I think they also need to understand why.
Re: Insurance Companies and Claim PaymentGo to Top
Originally Posted by ToddC
I view several insurance and financial forums and review the insurance questions. A comment that almost always comes up is the following:
"The insurance company will try to pay as little as possible on the claim".
People seem to be shocked and hold this against the carrier. I understand their frustration but I don't know that they are really considering the "big picture".
We are speaking of an insurance company. It's a business. Just like any other business, it exists to make money. Is there any business that does not spend as little as possible in order to return a larger profit? Almost all insurance companies are not privitly held, that is, they have investors that they need to answer too.
I understand that most people don't think of an insurance company as a business but it is just that. But insurance companies also play a major role in keeping commerce working. Without insurance policies, commerce would quickly screech to a sudden stop.
It's also ironic that people can have such a different piont of view about the way a claim is handled. When I'm addressing a claim and my insured thinks the other person is at fault, they don't want their carrier to pay a dime and even spend thousands of dollars to defend that $200 property damage loss. But when the same person needs to collect from an insurance company, they justw want to blindly pay the loss without even looking into the matter.
Don't get me wrong... I certainly understand why people don't like that insurance companies don't want to pay out money but I think they also need to understand why.
If an individual gets into an accident and has to go to the emergency room who will foot the bill, the health insurance carrier or auto insurance carrier?
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[COLOR=#000066]"Tell me and I will forget. Show me and I will remember. Involve me and I will understand." Confucius
In PA, there is a minimum requirement for medical coverage on automobile insurance policies. Therefore, IMHO the auto insurance company pays first---at least up to the limit---and the health insurance carrier would cover any excess. This coverage is in addition to bodily injury and personal liability. (P.S. I am not an expert or even very knowledgeable on P&C).
Also realize that most health insurance companies can take money that you win in a lawsuit to offset what they paid in medical claims. So you get into a car accident and win $100,000 but your medical bills were $80,000. You might only be left with $20,000. It's called subrogation.
------------------------------------ Health Insurance Agents: Training, Support, Discounts, E&O for $440 www.ihiaa.com
So if I understand this correctly, if an individual or family is involved in a car accident and requires medical assistance, the auto insurance carrier will pay according to the limits of the policy and then the health insurance carrier will take care of the rest accordingly to the health insurance policy?
Also realize that most health insurance companies can take money that you win in a lawsuit to offset what they paid in medical claims. So you get into a car accident and win $100,000 but your medical bills were $80,000. You might only be left with $20,000. It's called subrogation.
This is not true. Subrogation is different. Subrogation is the term used for the legal process by which an insurer seeks recovery of the amount paid to the insured from a THIRD PARTY responsible for having caused the loss. Subrogation transfers an insured's legal right of recovery to the insurer that has paid a claim.
It prevents the insured from collecting twice for the same loss and ultimately holds the responsible third party accountable for the loss.
I think that's what I said but maybe my example was wrong. Take this example; a drunk trucker hits you which results in $200,000 in medical bills for the insurance company. Later you win a million dollar judgement from the trucking company. What happens? From the way I understand it the insurance company can take $200,000 of that judgement.
I think that's what I said but maybe my example was wrong. Take this example; a drunk trucker hits you which results in $200,000 in medical bills for the insurance company. Later you win a million dollar judgement from the trucking company. What happens? From the way I understand it the insurance company can take $200,000 of that judgement.
You have to look at who the liable party is. In your example the liable third party is the trucker. The claimants insurer can subrogate from either liable trucker or his insurer. The insurer would have to prove that you were the liable party to be able to subrogate from you. Not so in your example.
Besides the truckers liability (whether personal or business) should have paid up to it's limits then if still not enough then you could sue for the difference if you didn't have under/uninsured coverage on your auto. If you did then your policy would kick in until your limits were reached. In that case your insurer could subrogate it's loss by going after the responsible 3rd party.
The claimant in your example is trying to double dip. You can't do that either.
Last edited by insuremojo : 03-07-2007 at 08:08 PM.
Insuremojo, your just arguing semantics. John's posts are actually correct... just simplified to avoid turning into a book.
http://www.lcgroup.com/explanations/subrog.htm
"An insurance carrier may reserve the "right of subrogation" in the event of a loss. This means that the company may choose to take action to recover the amount of a claim paid to a covered insured if the loss was caused by a third party. After expenses, the amount recovered must be divided proportionately with the insured to cover any deductible for which the insured was responsible. "
Trucker files a health claim as he was injured in an accident. His health carrier pays. They then assume their insureds right of recovery if the at-fault party's liability carriers issues payment. That is, they are subrogated to their insured's right of recovery. Who, when, why, where they collect is really not the point of John's post and this would/could change depending on so many factors that it's not worth discussing. Bottom line, they _can_ recover their payment from any settlement.
The insurance company that pays a claim up front is _always_ going to recover from a 3rd party (otherwise they would just be demanding their own payments back). If they recover the money before it's paid to their own insured or after, it's still _third party money_. The _process_ is, as John stated, subrogation.
As far as the last post, it's difficult to understand what you are saying as you use the terms "claimant" who could mean anyone and "insurer" but are speaking about two different insurance companies. But yes, one's own insurance company _can_ collect funds already paid to their own insured. It's called..... well, you know.
About the only time I'd not consider recovery of funds paid, subrogation, is when a carrier makes a payment they did not owe to begin with. An example; A carrier requests to be paid by another carrier as they claimed they were subrogated to a right of recovery. The carrier pays but then later finds out they were not required to pay those funds. Requesting the money back would not be subrogation as they've not assumed any one's right of recovery. They are simply trying to get back a payment they should have never made.
insuremojo, your just arguing semantics. John's posts are actually correct... just simplified to avoid turning into a book.
About the only time I'd not consider recovery of funds paid, subrogation, is when a carrier makes a payment they did not owe to begin with. An example; A carrier requests to be paid by another carrier as they claimed they were subrogated to a right of recovery. The carrier pays but then later finds out they were not required to pay those funds. REQUESTING THE MONEY BACK WOULD NOT BE SUBROGATION AS THEY'VE NOT ASSUMED ANY ONE'S RIGHT OF RECOVERY. They are simply trying to get back a payment they should have never made.
You make my point for me (see highlight portion of your post). All I was saying was that johnp was not illustrating subrogation but instead was talking about double dipping. IMO.
If the injured party sues for unpaid medical bills that were in fact paid THEN the health company CAN take that money but double dipping is illegal and should not be done in the 1st place. What if the million dollar judgement was for pain & suffering and lost future wages? Could the insurance company come in and take that money then? I don't think so....as long as it is not payment for medical bills that were claimed to be unpaid but in fact were? Too many variables. In retrospect, if the accident was not your fault then this should be a null and void discussion because the liable parties insurance should be the one responsible for paying all medical bills (up to their selected limits). Any remaining medical bills should not be billed to YOUR health insurance company but rather you would sue the liable party (as long as their were sufficient assetts). If no sufficient assets then you're up a creek and would probably have to send those bills to your health insurance company who could attempt to subrogate from the liable party themselves but you CANNOT then sue for the unpaid medical bills. You could sue for pain & suffering and lost future wages among other things.
Last edited by insuremojo : 03-08-2007 at 01:55 PM.
You make my point for me (see highlight portion of your post). All I was saying was that johnp was not illustrating subrogation but instead was talking about double dipping. IMO.
If the injured party sues for unpaid medical bills that were in fact paid THEN the health company CAN take that money but double dipping is illegal and should not be done in the 1st place. What if the million dollar judgement was for pain & suffering and lost future wages? Could the insurance company come in and take that money then? I don't think so....as long as it is not payment for medical bills that were claimed to be unpaid but in fact were?
A person can obtain a judgement for anything they want... paid or unpaid already. That is, a person's health insurance carrier could pay all the medical bills. The person could then either accept a payment for medical bills from the at fault parties liability carrier or obtain a judgement for that amount. So, yes... they _can_ "double dip". It then becomes the health carriers responsiblity to recover... or subrogate... from their insured for the money they spent on the medical bills...they need to show some right of recovery, though. This could be in the form of policy wording (secondary to all other recovery) or a lien. To be honest, health carriers almost always pay for such things as injuries in automobile accidents and they seldom seek recovery. I've also paid injured person's for medical expenses even though they were paid by the health carrier (as this is required). Some times this payment might go directly to the health carrier but 99.99% of the time I pay it to the injured person and obtain a release stating if the health carrier seeks recovery, he/she would be responsible for that.
But in any case, we were discussing what subrogation was. In all these cases, the health insurance company recovering money from their own insured would still be "subrogation" as John mentioned, as long as it was a payment they owed initially. Then it's called "getting your darn money back"!
My bro's an attorney and referred me to one of his friends who clarified it. Let's not use an auto insurance example but say you slipped and fell in a grocery store and they were negligent. Say you broke your hip, really messed yourself up and medical bills came to $50,000.
Now you sue but you can only sue for pain and suffering and what you incrurred in medical expenses. If you only paid $5,000 and your company picked up the rest you obviously can't add the other $45,000 into the lawsuit. However, your insurance company can indeed seek to recover $45,000 from the liable party if you have that clause in your contract.
You'll still walk with your judgement for the $5,000 you paid out of pocket and whatever the jury awared for punative damages, but you obviously cannot recover the $45,000 the health insurance company paid. If you tried to somehow sneak in the $45,000 for medical expenses and actually received the money then your health insurance company could seek to recover directly from you if and when they caught it.
My bro's an attorney and referred me to one of his friends who clarified it. Let's not use an auto insurance example but say you slipped and fell in a grocery store and they were negligent. Say you broke your hip, really messed yourself up and medical bills came to $50,000.
Now you sue but you can only sue for pain and suffering and what you incrurred in medical expenses. If you only paid $5,000 and your company picked up the rest you obviously can't add the other $45,000 into the lawsuit. However, your insurance company can indeed seek to recover $45,000 from the liable party if you have that clause in your contract.
You'll still walk with your judgement for the $5,000 you paid out of pocket and whatever the jury awared for punative damages, but you obviously cannot recover the $45,000 the health insurance company paid. If you tried to somehow sneak in the $45,000 for medical expenses and actually received the money then your health insurance company could seek to recover directly from you if and when they caught it.
I'd only add one thing.... by saying "caught" it seems to imply that you're doing something wrong. You would not me. The liability carrier would not be responsible for paying the health carrier (if no lien had been filed). It's the _injured person_ who could be held accountable for paying back the health carrier _once the judgement was awarded_. So the injured person would argue that they _would_ be responsible for paying back the health carrier... and they would be correct. If the liability carrier has a lien from the health carrier they would point this out prior to the judgement so that they could satisfy that binding lein upon them.
So, the injured party could/would collect the payment for the medical bills.... already paid but then the health carrier would need to collect from that injured party for the amount their policy states they can recover.
(Actually in some states, I think Florida is one, you can actually "double dip" and the health carrier may not be able to recover. It depends on the state and the health insurance policy wording, in this case).
I wonder if the health insurance company could sue a third party even if you didn't. Imagine your out of pocket was already satisfied and a $50,000 medical bill was incurred as a result of a negligent party. You owe nothing and insurance picks up the entire tab. For whatever reason you decide not to sue even though it's a clear cut case of negligence. Could the health insurance company sue the third party directly?
So, the injured party could/would collect the payment for the medical bills.... already paid but then the health carrier would need to collect from that injured party for the amount their policy states they can recover.
(Actually in some states, I think Florida is one, you can actually "double dip" and the health carrier may not be able to recover. It depends on the state and the health insurance policy wording, in this case).
Why sue for unpaid medical bills when they've been paid? Let the health insurer incur the extra legal bills to subrogate those from the liable party.
LOL haven't you seen the PEOPLE'S COURT? "You're trying to win a judgement for bills you didn't pay out of pocket? Show me your receipts & prove it! LOL get out of my courtroom!" That's the point of subrogation...and you're right the health insurer will pick up the bills and may/or may not subrogate but you should leave the ball in their court.
I wonder if the health insurance company could sue a third party even if you didn't. Imagine your out of pocket was already satisfied and a $50,000 medical bill was incurred as a result of a negligent party. You owe nothing and insurance picks up the entire tab. For whatever reason you decide not to sue even though it's a clear cut case of negligence. Could the health insurance company sue the third party directly?
Actually no, they could not. It's an odd situation. The health carrier has a right to collect... only _if_ the liability carrier issues a payment. They health carrier cannot initiate the claim as they've not suffered the loss (rememeber, they made a voluntary payment under their policy). What they can do is to file a lien with the liability carrier. This means if the liability carrier issues a payment, they need to pay the health carrier back as well. The health carrier would not have a right to make the liability carrier settle the claim, only seek recovery if a payment was made.
Insurance Companies and Claim Payment
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