After a loss, the first person to be in contact with a policyholder is the first report taker who is trained to listen carefully to the details of the loss being reported and records it accordingly, but who has no knowledge of the ultimate severity of the loss. The carrier field insurance adjuster or an IA is usually the first person representing the insurer to be on the scene after a loss, and while it is their responsibility to conduct a thorough investigation to mitigate loss exposure, control expenses and advise the carrier as to reserving to the exposure, they are not always authorized to assign experts which might assist in their investigation to identify and ensure a successful subrogation outcome. Oftentimes, after the damages have been appraised, photographs taken and witnesses interviewed, a decision must be made as to whether or not an expert should be retained to determine the cause and origin of a loss. And as any seasoned recovery specialist knows, it is imperative to preserve all evidence which may need to be examined by an expert, safeguarding it before any demolition or reconstruction begins.
Choosing the right expert may be critical to the success of your subrogation claim but it is often an expensive investment. There are times the recovery representative must make a determination as to whether the cost involved in incurring such an expense is warranted based on not only the facts of the claim, but also the amount paid. Certainly such a decision is easier on high dollar cases where the costs of retaining all experts such as a cause & origin expert or engineer can be justified, and in fact might be subject to criticism if not obtained. In addition, recovery efforts may include litigation on larger cases but not on smaller losses giving rise to looking for other options to support and prove our theory of negligence.
In an effort to increase recoveries and reduce expenses on behalf of our clients, Spartan Recoveries takes the amount of the paid loss into consideration when determining how to proceed with our investigation. While we are not totally dollar agnostic, Spartan does make every effort to negotiate settlements on smaller claims as well as larger ones. Some alternatives we utilize rather than immediately assigning an expert on low dollar claims to conduct a full investigation can include:
- Hiring an expert on flat-fee basis rather than time and expense where costs can easily get out of control. By having an honest discussion with our expert we can discuss the merits of the case and come up with alternatives to testing. Our experts (with whom a good working relationship already exists) may be able to share their opinion by just reviewing photographs provided to us by the IA who initially inspected the loss. In some instances viewing these pictures can tell the expert there is no subrogation.
- Knowing the make model and serial number of a product lets us know the age of the item and coupled with the applicable statutes of repose can eliminate the need for inspection due to age wear and tear and eliminate unnecessary costs.
- Another consideration might be allowing the manufacturer to conduct non-destructive testing rather than initially assigning our expert to conduct either a singular review or joint review until such time as destructive testing might be necessary.
- In many instances, detailed notes and well documented photos taken after the loss and during the repairs of the actual damages are good, but even more important are clear photos of the suspected cause of loss showing the defect, i.e. a washing machine supply line showing the crack in the hose coupled with proof of the age of the line could result in an offer being made by the manufacturer.
- Detailed witness statements from all parties who could testify as to how, when and why the occurrence was caused by a third party can lead to credible testimony as to the cause & origin of the loss.
- In some instances, obtaining non-traditional expert reports from the contractor performing the repairs can certainly assist in obtaining a recovery, especially with a detailed description of the defect which caused the loss and is thus requiring the repair.
- An arranged scene inspection with adverse party(s), adverse carrier or manufacturer, before the repairs commence may be persuasive in ascertaining cause of loss justifying a recovery payment be negotiated.
Most subrogation law firms will appreciate having an expert’s report, and in most instances will require one before commencing litigation, but for those cases that do not warrant the expenditure, thinking outside the box may prove to be the best resource in supporting recovering efforts.