
Quoting
Taxing Matters
No, the OP should not do that unless the insurance company is suing the OP's wife under its right of subrogation. Until then, the legal claim here is by the employer, not the insurance company. It is the employer that suffered the direct loss from the embezzlement, not the insurer. So until the right of subrogation is invoked the OP's wife would pay the employer, and then it is up to the insurance company to get the money it paid back from the employer. I can see why you'd like the payment direct to the insurance company since your career was spent representing them as an adjuster, but paying the insurance company directly before it invokes its right of subrogation exposes the OP's wife to a claim by the employer that might result in paying this twice.