Commercial and homeowners’ insurance claims for property damage are rarely simple transactions. Even when a roof collapse, flood, fire, or power surge may seem like an unpredictable accident, that may not be the case. There may be a third party, such as an installer, manufacturer, shipper, or contractor who acted negligently. When that’s the case, they should bear the financial responsibility for the loss.
The difficulty with subrogating property damage claims, though, is that a part of the loss event usually destroys crucial evidence. Effective homeowners’ insurance subrogation hinges on urgency and vigilance – immediate investigation and evidence preservation, redundant and detailed documentation at every step of the process, and an offense-focused approach to holding liable parties accountable, all while managing the many nuances and potential legal pitfalls endemic to insurance lawsuits.
Here, we explain the fundamentals of property damage subrogation claims, not just as a theory, but as a practice of advocacy for the insurer’s right to subrogation recovery.
Defining Different Types of Property Damage Subrogation
Cases involving property damage can take several different forms depending on the context of the loss, including:
- Fire and smoke damage
- Power utility (e.g., surges, blackouts)
- Structural failures/collapse
- Toxic hazards (e.g., mold, uncontained asbestos)
- Vandalism/malicious damage
- Water/sewer (e.g., backups, burst pipes)
- Weather-related damage (e.g., roof collapse, flooding)
In any of these claims, especially weather-related property damage, the opposing insurer is likely to claim the “Act of God” defense. This defense protects parties from liability when the cause of the loss event could not be reasonably predicted and was not caused by tortious behavior. However, a subrogation attorney should never close the claim without further investigation.
Hidden Recovery Opportunities in Subrogation of Homeowners’ Claims
Many “acts of god” that result in property damage claims are actually just acts (or lack thereof) of people; there are often liable parties a carrier can pursue for subrogation claims recovery. For instance,
- A fire subrogation claim that began from an appliance failure in the kitchen could have resulted from:
- Faulty installation of the electric/gas hookups
- A manufacturer’s defect in the burner switches on an oven
- Unknown damage that occurred during shipping but went unreported
- Or consider a utility subrogation claim resulting from a burst sewer pipe:
- The utility company may have failed to properly maintain the line
- The plumber’s repair from the last time it got blocked may have been shoddy
- The contractor who installed and connected the line may have been negligent
Subrogation claims adjusters and specialists should look into possibilities such as these at the outset of a claim. The more detailed knowledge of the facts of the case, the more informed all subsequent decisions in the insurance subrogation process.
Immediate Investigations Are Everything in Property Subrogation
Once a homeowners’ insurance claim is submitted, the policyholder and any involved parties are likely to move on as quickly as possible – to get the insured back to normal life. Early investigations are integral to preserving the facts of the scene to the fullest extent while remediation occurs. Adjusters should consider things like:
- Witnesses are less reliable the farther away they get from the event. Prioritizing witness statements ensures you have the most accurate perceptions people had in the moment.
- The insured will likely seek cleanup/remediation immediately – no one wants to keep a flooded basement or charred stovetop.
- Records like receipts get thrown away quickly, and if a contractor is involved, they may get rid of the faulty part and its records right away.
- Utility companies will likely replace a broken transformer with urgency after it causes damage, especially if it was poorly maintained beforehand.
Evidence preservation and thorough documentation are crucial to the strength of a subrogation claim for property damage. If evidence you know existed is already gone, liability does not matter, because you do not have the evidence to carry a burden of proof should the opposing carrier escalate to litigation.
Subrogation Claims for Property Damage Require a Diverse Legal Team
Because the subrogation of property damage claims is a forensic effort, these cases often require more of an interdisciplinary approach than other kinds of subrogation claims. Professional investigators and subject experts are strategic investments for the subrogating carrier. For example, fire investigators have specialized training that helps them determine the cause, origin, movement, and intensity of a fire even when standing amongst ruins.
Similarly, a forensic structural engineer can examine a roof collapse and determine whether material failure, construction defects, overload, or improper supports contributed. Along with the investigators and experts, a case management team of subrogation claims adjusters, specialists, and attorneys brings diverse skills and depth of knowledge about the appropriate strategies for the unique facts of each case.
Rathbone Group serves clients across the country with property damage claims of all kinds, large or small. The key to effective subrogation recovery is to make it a practice to identify and pursue all claims with subrogation potential. With an insurance-focused law firm as your partner, this long-term investment in pursuing recovery will result in minimized loss and, with Rathbone Group, minimized cost of subrogation pursuit.
For more information on our subrogation services, reach out at info@rathbonegroup.com. And for more educational resources on important topics in subrogation law and process, visit our blog for in-depth articles, our YouTube channel for condensed discussions, and our On Subrogation podcast, where our skilled lawyers deep dive into case studies and legal developments in the field.