After a significant property loss—whether for personal or commercial use—there is a desire by both the insured and the carrier to settle the claim in a quick manner for various reasons: the insured wants a return to normalcy, and the carrier wishes to provide the utmost in customer service while controlling costs like additional living expenses and/or possible losses incurred by business interruption.
The question of subrogation then arises, which in a large property loss case can pose unique challenges when it comes to a successful recovery. With regards to a claim made from a recovery perspective, getting involved early in the process to gather and protect critical information and evidence is crucial.
According to the November 2015 issue of Claims Magazine, the following five basic practices can aid an insurer in securing more of their paid claims funds:
- Conduct or direct field scene investigations with an eye towards subrogation. The field adjuster can ask pertinent questions and document third-party potential to help back up the subrogation claim.
- Make sure to preserve the evidence. It is up to the insurance professional to alert the policyholders of the importance of retaining evidence to be tested and providing them with a reason for cooperating if there is any hope of recovering their deductible. An even better alternative is having the field or independent adjuster collect the evidence at the scene, especially with losses that occurred from a faulty product.
- Hire the right company/expert to conduct the examination of the faulty product. Extremely careful attention must be paid to the handling of the product to avoid allegations of destruction or tampering. Ideally, the evidence is examined simultaneously by the expert for the insurer and the manufacturer, which saves time and money.
- Secure a cause and origin expert to establish a solid subrogation case. Strong consideration for this type of referral should be given to electrical fires, appliance fires, and spontaneous ignition incidents with the aim of establishing and confirming third party negligence and/or product failure.
- Aim to identify potential subrogation on cases before any payment has been made. Determining cause and origin and proving negligence should start as early as possible. Develop an in-house program or consider subrogation vendors (provided by FNOL services) that use sophisticated methods of data extraction and optical character recognition which enable them to start the investigation before the claim is paid by the carrier.
On complex claims especially, savvy property adjusters recognize the importance of identifying subrogation possibilities early on in the claims process, before the scene has been compromised and important clues as to the cause and origin still remain intact, resulting in success for all parties involved.