Conducting subrogation investigations is a balancing act. The need to move quickly to accommodate mitigation and repairs is balanced against the need for a proper and thorough investigation to ensure subrogation rights are preserved. Retaining experts and consultants, identifying potential interested parties and adverse parties, sending notices, and accommodating schedules of all those involved takes time. This time butts up against the insured’s desire to get the property back in working order as well as the carrier’s desire to mitigate damages.
At times this balance is not easy, so we must remember the reasons for preserving the scene. Cause and origin investigators operate off a fire investigation guide referred to as National Fire Protection Association (NFPA) 921. NFPA 921 contains numerous sections that discuss the need to preserve the fire scene, not spoliate the evidence, identify interested parties, and give the parties an opportunity to participate in an inspection of the scene. Pertinent sections are listed below:
- Section 14.3: “Preservation of the Fire Scene and Physical Evidence” – “the entire fire scene should be considered physical evidence and should be protected and preserved.”
- Section 17.3.1: “Generally, the cause of a fire or explosion is not known until near the end of the investigation. …As a result, the entire fire scene should be considered physical evidence and should be protected and preserved.”
- Section 15.2.8: “The investigator, the private-sector investigator in particular, should recommend to the client that they need to notify all identifiable interested parties who may have a legal interest in the investigation of the inspection and give them the opportunity to participate or witness and record such activities.”
- Section 12.3.5: “Spoliation of Evidence” – Spoliation of evidence refers to the loss, destruction, or material alteration of an object or document that is evidence or potential evidence in a legal proceeding by one who has the responsibility for its preservation. Spoliation of evidence may occur when the movement, change, or destruction of evidence, or the alteration of the scene significantly impairs the opportunity of other interested parties to obtain the same evidentiary value from the evidence, as did any prior investigator.”
It’s not just that we need to save the scene under NFPA 921, but we also want to save the scene for a joint inspection. Providing interested parties an opportunity to inspect the scene and the evidence in place, allows for decisions as to preservation of evidence for further inspection to be made on the spot. This eliminates the arguments for other potential causes and spoliation of evidence. And, of course, this goes for losses involving fire, water and other property damage incidents.
In addition, in states with a Right to Repair Act (including California), if the case involves a construction defect claim against the builder of a residence, the statute requires we give the builder an opportunity to inspect the scene.
While we certainly need and want to do a joint scene inspection in cases with subrogation potential, we must be mindful to not cause delays. Insureds often feel reassured that the cause of the loss is being thoroughly investigated, but also want to move forward with repairs as soon as possible. The sooner we can identify a case as having subrogation potential, the sooner we can get relevant parties on notice and set a joint scene examination.
Note, despite the need and desire to have a joint scene examination in cases with subrogation potential, do not presume there is no potential for recovery if a scene examination does not take place. It may not always be known until a later destructive examination that the responsible party is identified. Key for the subrogation investigation is to preserve and document as much as you can and involve the interested parties as soon as they can be identified.