News

Recoveries Help Contain Coverage Costs

May 04, 2022
For the years 2017 through 2021, MCIT made the above recoveries on behalf of members. These recoveries help reduce the total payments made for claims, which in turn can positively impact members’ contribution rates.

MCIT member claims can sometimes involve a third party who is legally responsible for the loss or damage in whole or in part. In these cases, MCIT does not leave the money on the table. Rather, the claims staff pursues recovery of those funds on the member’s behalf. The processes of salvage, subrogation and restitution help to contain the cost of coverage for all members.

During the past few years, MCIT has increased its efforts in this area, particularly focusing on subrogation, as it garners a better return for the time spent than for restitution efforts. Since 2017, MCIT has recovered nearly $3 million.

Salvage

Salvage is the process MCIT uses to sell items that have been damaged beyond repair, typically what is referred to as a total loss. This occurs most often when a vehicle has been damaged and determined to be a total loss but still has some value, such as for parts. During the loss settlement, the title is transferred to MCIT.

MCIT recovers part of the cost of paying the total loss claim by selling the vehicle through a salvage vendor, less applicable fees. Since 2017, MCIT has recovered approximately $700,000 from salvage.

Subrogation

Subrogation is the process whereby MCIT asserts the rights of the member after a loss settlement against a person or business that is legally responsible for the loss. A simple example of this would be a situation where an employee is injured, perhaps by a dog bite or a slip and fall, during a home visit.

In this type of claim, MCIT compensates the member and employee under workers’ compensation coverage, and then brings a claim against the property owner (property owner’s insurance) for the amounts paid for the injury. Subrogation only applies in situations where a covered loss is paid under the terms of the MCIT Coverage Document.

Since 2017, MCIT has recovered just over $2 million from subrogation efforts.

Restitution

Restitution is the process used in criminal proceedings against individuals for loss or damage to property or injury to employees that occurs during commission of a crime. For example, if an individual intentionally damages a law enforcement vehicle during a pursuit or injures a deputy or corrections officer, the court often orders monetary restitution to be paid as a part of sentencing in the criminal proceeding.

MCIT generally recovers the least from this type recovery, as criminals often do not have the means to pay the fines. Since 2017, MCIT has recovered $145,000 from restitution.

Recovery Efforts Benefit Membership

When MCIT receives compensation from those responsible for a covered loss or injury, it reduces MCIT’s overall claim costs, which in turn results in a benefit for members through a lower annual contribution for coverage. Lower costs of coverage benefit all members by reducing a budget line item to allow members to focus on their core responsibilities.