The efficacy of subrogation efforts are a factor every company considers in balancing risks. Maximizing subrogation recovery in every possible case is key to minimizing claims losses and maintaining the quality, reasonably priced policies that keep insurance affordable and ensure that a carrier remains competitive. There’s a lot of nuance in the legal realm of insurance subrogation, and mistakes or oversights that are trivial in other civil forums can eliminate the potential for subrogation recovery altogether.
Subrogation education is crucial for insurance entities as well as subrogation law firms; advocacy for insurer rights to recovery – and holding tortfeasors accountable – requires teamwork. Here are 8 of the most common obstacles and pitfalls to subrogation recovery and how to avoid letting the bad guys get away:
1. Failing to Engage a Dedicated Subrogation Team
The labor involved to pursue subrogation recovery in earnest requires a dedicated subrogation consultant to supplement any in house efforts. Even a captured law firm is spreading itself thin trying to handle internal duties while managing subrogation claims – especially if they become complex, as they often do. Involving a subrogation law firm or insurance law firm dedicated to subrogation immediately sets a tone. Consider:
- Cost saved in time, labor, stress. All claims are pursued with efficiency and skill while you continue to focus on a higher volume of claims easier to recover and your business.
- Improvements in documentation. Subrogation attorneys are extremely skilled at generating documents, managing data, and keeping deadlines.
- A resource for more targeted subrogation pursuit. Niche experience and the skill that comes with it increases protection from subrogation losses.
2. Delaying Subrogation Investigation & Evidence Collection
Failure to respond to potential insurance disputes with immediacy can ruin a subrogation case in just moments. Consider subrogation of property claims for fire damage. The event itself removed most of the evidence. If you give a burnt out house even a day to settle, it may collapse – investigation is no longer possible.
Similarly, witness memory can quickly wane, and CCV footage at a small business may be erased and recycled on a certain schedule. At the outset of a case, subrogation claims adjusters and specialists should involve experts and investigate the scene ASAP:
- Photograph everything to the extent that, if needed, you could recreate the state of the scene in 3D detail. It is a low time investment practice that preserves crucial evidence.
- Interview all parties present at the scene, including knocking on doors of surrounding buildings to see whether others may have insight into what happened.
- Make sure you identify all sources of monitoring in the vicinity, whether doorbell cameras, CCTV, or other home/business security systems. People are more likely to provide access than not if they feel like they will help resolve the issue.
- Document everything in every possible media and make sure to back it up. Don’t just take notes on witness statements; take audio or even audio and visual. Ask for backups of any footage provided and photos taken.
Create a central repository of evidence for each subrogation claim, as it will make ongoing investigations as well as discovery in potential subrogation litigation much simpler.
3. Not Being Proactive About Subrogation Service & Statutes of Limitationss
Much of the law doesn’t look kindly upon insurers, who are often viewed more as deep pockets than people-centered businesses that benefit their insureds. As a result, navigating the subrogation process gets tricky; there are conflicting laws, limitations upon recovery strategies, and complicated statutes of limitations that limit the time a claim can be pursued.
Likewise, rules for service vary by state, and the addition of subrogation service by social media adds another layer to the challenge. Especially in uninsured (UIM) auto subrogation, tortfeasors may try to hide, refuse service, or even skip town. This is another area where a subrogation department with the resources to skip trace sneaky tortfeasors and identify additional assets to pursue can be a major advantage in difficult subrogation claims.
4. Overlooking Waiver of Subrogation Clauses
Never proceed with a subrogation case before going through contractual language with a fine-toothed comb. Consider failing to read the fine print:
- What if there is a waiver of subrogation blatantly in the language?
- What if there is no insurer’s right of subrogation pursuit if a settlement between the insured and tortfeasor is already met?
- What if ambiguous release language results in lower (or no) recovery?
The goal of the subrogation process is to minimize subrogation costs and maximize claim recovery. You don’t want to incur court costs only to find out there was no chance of recovery in the first place, and you’ve lost even more money on that claim.
5. Not Considering Alternate Routes to Subrogation Recovery
Before pursuing litigation, there are several pre-suit paths to subrogation resolution that save time and money while reducing the contention and complexity of the claim:
Pre-suit Negotiations
If there is no question of liability and damages, you may be able to reach out to the opposing carrier directly and get the matter resolved quickly and cooperatively. This is by far the ideal route to a subrogation settlement.
Mediation
This is a more formal venue to reoslve insurance disputes. Mediation removes the confrontation and stress associated with direct communication but still leaves parties in complete control over the subrogation process.
Arbitration Forums
Arbitration Forums is a private arbitration company designed for the insurance and subrogation industries. Parties can utilize this written venue to submit claims to be heard from an arbitration panel of claims adjusters from various carriers.
Since this is a forum where arbitrators are educated on the subrogation process, it provides comfort in the fairness of the process. Further, decisions can be more final than other non-litigation routes to subrogation recovery because both parties have already agreed to abide by the judgment.
Litigation
When litigation is the best route, engaging a subrogation law firm that is well versed in the nuances of subrogation law across the country is key to the regional or national pursuit of subrogation recovery. Utilizing the litigation process can avoid the perception that a carrier will always settle for a lesser amount by discouraging chipping and forcing an unresponsive opposing carrier to come to the table.
6. Failing to Identify All Liable & Interested Parties
Many events resulting in insurance claim payouts involve more than two parties, but it takes a dedicated investigation and depth of experience in subrogation law to figure it out. A subrogation law firm has the resources and legal analysis to identify additional liable parties through investigation or additional legal theories, which maximize potential for recovery by creating additional sources of recovery.
7. Ignoring State Variations in Subrogation Law
This is a big one, and something Rathbone Group prioritizes in our subrogation services offerings. PIP subrogation in Maryland proceeds in a completely different manner than Florida PIP subrogation. Texas subrogation statutes may interpret the Made Whole Doctrine differently than Virginia’s subrogation laws. And what if an automobile subrogation claim involves multiple states whose laws conflict? Which state statute trumps the other(s)?
Rathbone Group leverages our team of subrogation lawyers who are licensed to practice in dozens of state and federal jurisdictions with our partner network of the best subrogation attorneys available in other states to provide nationwide coverage for our clients. The advantage is specialized knowledge of local insurance laws in every locality, which benefits boutique carriers and national conglomerates alike.
8. Being Lax About Pursuing Viable Subrogation Claims
Resources dedicated to subrogation are crucial for carriers who want to minimize subrogation costs while maximizing the number and proportion of payout losses they are able to recover. A insurance carrier needs to focus on the quality services and comprehensive, affordable coverage that customers invest in and depend on. Outsourcing more complicated or higher risk claims can allow an insurance carrier’s subrogation resources to maximize subrogation recoveries from lower hanging fruit.
Consider missing just 20 opportunities to recover $2000 payouts. That’s $40,000 of unnecessary hemorrhaging! Or consider a single $100,000 claim appears non-viable at the outset, but a subrogation consultant takes 5 hours digging into it to find out it can be pursued. These figures add up to minimize subrogation cost and loss. It also sends a message to the industry and tortfeasors that your company doesn’t just let things go – you fully exercise insurer’s right of subrogation at every opportunity.
For More Education On Subrogation…
Avoiding these common mistakes can transform how the subrogation process works for you; with more recovery comes more financial stability and more opportunity for growth. Rathbone Group’s subrogation attorneys and team of claims adjusters and other insurance professionals serve clients across industries and across the nation with strategic, collaborative, robust subrogation services so you maximize recovery in your subrogation claims.
For more information about us, inquire at info@rathbonegroup.com. And for more free educational resources on subrogation, visit our Blog, YouTube channel, and podcast library for helpful insights, tips, and strategies On Subrogation.