ubrogation is the necessary evil of recovering as much of our insureds’ claim dollars as possible in order to help hold down insurance premiums and soften the blow a claim event might otherwise have on them. No industry is perfect, and insurance is no exception. Years of subrogation litigation experience has distilled a few of the most common mistakes that we see clients continuing to make when it comes to recognizing and acting on subrogation potential. The following are some of the most common mistakes we repeatedly see within our industry at Woodall Batchelor PLLC.
Waiting too long to involve subrogation counsel
The dollars lost because claims with subrogation potential are referred to subrogation counsel mere weeks, days, or even hours before a statute of limitations or other deadline is about to expire, is almost incalculable. Claims deteriorate with age and we see far too many files entrusted to us at the very last moment which contain literally dozens of identical demand letters—with little or no substance or subrogation “proof” to support them—sent to the third-party carrier every six weeks like clockwork for years, each a carbon copy of the one which preceded it. When the file is submitted to subrogation counsel with very little time left on the clock, there is frequently no opportunity to conduct a thorough investigation. Evidence has disappeared or been destroyed. Deadlines have passed. Lawsuits have been settled. Releases have been signed. Witnesses have vanished or been “reached” by the other side. Money has been lost. It is the number one subrogation-killer we have seen over the years, in terms of the volume of dollars lost and the number of claim files.
Failure to recognize third-party liability
The biggest obstacle to larger and quicker subrogation recoveries is your lawyers. Lawyers are our own worst enemy. Our industry is, by design, steeped in the mind-set of limiting liability. Even the most experienced claims adjusters see the comparative fault of their insured before they see the liability exposure of the tortfeasor. Claims professionals are often blind to liability. Your greatest strength is also your greatest weakness. As subrogation counsel, our team at Woodall Batchelor PLLC are plaintiffs’ trial lawyers for the insured industry; hired guns that push your subrogation claims to the maximum—the only way to achieve maximum recovery in each file. It is what makes us good at what we do. The best way to overcome an innate inability to recognize third-party tort liability is training. A claims handler doesn’t have to agree with enforcing third-party product strict liability, but they do have to take every reasonable effort to produce a recovery on behalf of their insured employer.
Lack of subrogation investigation
Whether a claim is large or small—the burden is the same. The subrogated carrier has the burden of proving: (1) that the defendant was negligent (or that a product was defective); (2) that this negligence proximately caused the damages which the carrier paid for; and (3) the amount and nature of those damages. If it fails with regard to any one of these elements, there will be no subrogation recovery. Liability carriers are quick to latch on to weaknesses in subrogation files and often deny claims simply because the demand letter doesn’t address these three elements satisfactorily. Like a chain, a subrogation claim is only as strong as its weakest link and that weakest link is almost always created early in the claim, when memories are fresh and evidence is available. The first few days after a loss are critical—the first and often only chance anyone may have to identify, retain, document, investigate, and record valuable information on which a future subrogation lawsuit will depend.
To find out more about large loss subrogation, don’t hesitate to reach out to one of our Insurance law attorneys in The Woodlands at Woodall Batchelor PLLC.