SUBROGATION

John Gow

In 2021, it was estimated that insurers in the United Kingdom paid approximately £8 million per day on home insurance claims

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In 2021, it was estimated that insurers in the United Kingdom paid approximately £8 million per day on home insurance claims, a significant cost to the community and insurer. An insurer is entitled to bring a subrogated claim upon acceptance of liability and payment of the insured’s claim.

Once insurers have paid out on the policy, they have the right to “step into the shoes” of the insured and pursue remedies that may result from the insured’s loss. This provides the insurer with opportunities to recover financial losses in part or full from a responsible or culpable third party. There are principles of subrogation that the insurer must consider when making decisions in pursuit of a recovery action but these are outside the scope of this article.

Assess the Recovery Prospect

Any successful recovery action is dependent on the collection of reliable information and evidence to support the claim. Moreover, the key to any successful recovery action is the early identification of claims that can be pursued through litigation. The assessment begins at the first notification of the loss. Not all claims will be appropriate but some questions to assist in the early assessment could include:

  • What is the nature of the loss?
  • Were any appliances or white goods involved?
  • How old were the appliances or white goods?
  • Was there any history of problems or defects?
  • Were any recent repairs or maintenance undertaken?
  • Who performed the installation, contractor or sub-contractor?
  • Was there a contract?
  • Could the loss have been prevented?
  • Could parties have mitigated the loss?
  • Were automatic fire protection systems adequate and operational?
  • Was the security adequate?

The claims handler should also be aware of other red flags, such as an uncooperative policy holder. Whilst this aversion to assist may be entirely innocent and related to dissatisfaction with the claims process, there may be ulterior motives behind their demeanour.

Appoint a Forensic Investigator

After an initial assessment by the claims handler, the early appointment of a forensic investigator will maximise recovery potential. Any delay in the appointment will increase the risk of evidence being removed, materials being added or the scene being altered in some other way. These are all activities that can diminish the chances of achieving a satisfactory outcome.

Sufficient and reliable evidence must be gathered in order to demonstrate a potential defendant is at fault. The early appointment of forensics will ensure that the loss is documented, evidence is identified, photographed and recovered, and key causative factors are determined. The proper recovery and documentation of physical evidence is critical to the success of any subrogation that may follow.

Collaborate with Stakeholders to Recover All Evidence

Whilst the scene will often reveal much of value, the investigator may be required to consider the details of the policy, contractual arrangements, receipts or invoices, all of which can be used to support any claim. Any delay in the claim investigation makes the recovery of reliable supporting evidence more challenging.

Effective communication between the policy holder, subrogation team and the appointed forensic expert will ensure the early identification of recovery opportunities and that all relevant evidence is collected and evaluated at the earliest opportunity. These are just some of the fundamental steps to follow, increasing the chances of success whilst reducing the outlay suffered by the insurer.

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About the author

John Gow
John is a highly experienced Fire Investigator who has provided expert testimony in fatal accident inquiry, criminal and civil court

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