When a significant homeowner property loss occurs, the adjusteris keenly aware of the insureds' desire to return to their homequickly after the reconstruction. It is also in the best interestof the carrier for the claim to move along in an expeditious mannerin order to provide high levels of customer service and controlcosts such as additional living expenses.

Losses involving large commercial properties are often verycomplex, and the adjuster must be well versed in a variety ofperils including building fires, explosions, collapses, waterdamage, mold, and equipment and machinery malfunction. Often,commercial properties involve tenant issues and exposures inaddition to the insured's real property loss. Again, the adjusteris trained to handle the claim in a professional and expeditiousmanner to satisfy the policyholder and minimize the claim forbusiness interruption.

Most subrogation professionals will agree property losses canpose unique challenges for a successful recovery. Very often,expeditious claims handling can have a negative impact on asubrogation opportunity if the adjuster is moving quickly to bringthe loss to a conclusion and forgetting about potential recoveryopportunities. A good practice would be for the property adjusterto place a subrogation indicator on any file having even theremotest subrogation potential. The adjuster should alert thesubrogation department to jump into the claim from a recoveryperspective as it is best to get involved early in the claimsprocess to gather and protect critical information and evidence.Best case scenario would be for both the claim adjuster and thesubrogation adjuster to develop a strategic relationship which willnot only keep the customer happy but will preserve the carrier'sright to a successful recovery, should one exist.

These five basic practices can assist an insurer in capturingmore of their paid claims dollars:

1.  Keep an eye out for recovery —While every company looks to mitigate their exposure to be sureonly what is owed is paid, mitigating exposure can also meanconducting or directing field scene investigations with an eyetowards subrogation — whether the company is utilizing staffadjusters or has engaged an independent adjusting company to do so.The field adjuster has the best opportunity to ask questions anddocument third-party potential.

Consider the situation where the damages were caused by a unitowner above the insured property. How easy would it be for thefield adjuster to obtain the name of that potential third party andpossibly knock on the door to ask a few questions like, “Whathappened?” “How old was the toilet?” “Who was the contractor hiredto do your renovation?” “What was the name of the service you hiredto winterize your unit while you were in Florida?” “Has yourinsurance carrier been by to inspect your damages?” “By the way,who might your carrier be?”

While they can certainly refuse to answer any questions, it isunlikely much information will be obtained by not asking anyquestions at all. The “good neighbor policy” occurs when a fire orwater loss occurs in a neighboring unit or home, and it is key tocommence contact immediately with the carrier for the other home.All too often there is no communication and the other party'srepresentative may be un-cooperative or unaware of any damage whenpresented with a subrogation claim, which may jeopardize asuccessful recovery.

2.  Preserve the evidence — The oldexpression “save the toaster” should be taken seriously! Too manytimes, recovery efforts are thwarted by a policyholder who can'twait to dispose of all those old parts, or absolutely needs to havethat hot water heater removed as soon as possible. We cannot expectpolicyholders to fully understand subrogation or the value ofpreserving evidence. It is clearly up to the insurance professionalto educate the policyholders and provide them with a reason forcooperating and letting them know that if there is any hope ofrecovering their deductible, the company needs to retain theevidence and have it tested to prove negligent installation ormanufacturing.

It may be beneficial for the field adjuster or independentadjuster to pick up the evidence (if possible) while at the scene.Having the evidence in one's possession is usually better thantrusting the insured to preserve it, since so many homeowners aremore apt to toss it out. Evidence retention is especially criticalin losses which occurred from a faulty product. Avoid spoliation(the destruction of evidence)! All adjusters investigating fire andexplosion losses should be familiar with the NFPA 921: Guidefor Fire & Explosion Investigations, which offersinformation on using the scientific method in origin and causeinvestigations, handling evidence and documenting theinvestigation.

3.  Hire the right expert:Hiring the right company/person to conduct the examination orinvestigation of the faulty product and to make sure themanufacturer's right to examine the product is preserved, is oftenas important as the retention itself. Meticulous attention must bepaid to the chain of custody to avoid allegations of evidencedestruction or tampering. This includes a record of how theevidence is stored, preserved and given to the expert to conducttheir investigation. The best scenario may be one where theevidence is examined simultaneously by the expert for the insurerand the manufacturer. Joint inspections save time and money, andcan usually get the case settled quickly.

4.  Cause & origin: Too many timesa theory of liability is just that — a hunch. A cause and originexpert can help explore that hunch in cases that warrant furtherinvestigation. In order to establish a solid subrogation case, itwill be necessary to have an expert who has multidisciplinarycapabilities and can utilize fire science, engineering andchemistry to determine cause and origin. Strong consideration forthis type of referral should be given to electrical fires,appliance fires and spontaneous ignition incidents to establish andconfirm third-party negligence and/or product failure.

5.  Early intervention: First noticeof loss (FNOL) outsourcing? Develop an in-house program or considerFNOL services with a reputable subrogation services provider toidentify potential subrogation on cases even before any payment hasbeen made. Determining cause and origin and being able to prove atheory of negligence must start as early as possible. Look forsubrogation vendors that use sophisticated methods of dataextraction and OCR (optical character recognition), enabling themto commence subrogation activities before the claim is actuallypaid by the carrier.

Too often subrogation is relegated to later on in the claimsprocess, after the scene has been compromised and important cluesas to cause and origin have been removed. On complex claims, smartproperty adjusters recognize the value of identifying subrogationpossibilities early, so everyone wins.