Subrogation is a great way to hold responsible parties accountable for manufacturing defects or installation errors. Successful subrogation ensures you recover the costs of settling the claim while making the insured whole. It seems like a win-win situation. So why is it an underused option when it comes to product failures?
Subrogation can be daunting, and often convenience is a key motivator. It may seem easier to simply settle a claim and consider it closed, but this is a misconception that leads to missed opportunities and unnecessary claims leakage. Here are five things you should know about keeping the subrogation decision-making process moving smoothly.
Strategy #1: Act Fast
Time matters when you’re deciding whether to pursue subrogation. Many states have statute of repose regulations, which restrict anyone from taking action against a manufacturer after a specific amount of time has passed. These laws may be a factor with certain products.
You don’t have to know all of these regulations (see Strategy #4), but you can kick off the inspection process quickly. As close to the time of loss as possible, arrange for transportation and inspection of the evidence if you’re considering subrogation.
Strategy #2: Retain the Evidence
This may seem self-explanatory: without evidence, you have no chance of pursuing subrogation. Be sure to collect any component you suspect may have been involved in the reported loss. Every piece of material surrounding the loss is important and can be inspected – no matter how small!
All evidence should be preserved to the best of your ability to ensure inspectors have everything they need to identify the cause of failure.
Strategy #3: Protect the Damage
A common pitfall of the subrogation process is damaged evidence. You might be asking, “Isn’t the evidence already damaged? Isn’t that why we’re doing this?” Yes, but in this case the damage itself is the key evidence, and a lot of shipping companies don’t consider it important because it’s already damaged. That attitude can lead to shipping damage if the item is carelessly packaged or loaded.
This water heater collapsed in transit because of insufficient restraints and padding, leading to additional damage that could compromise an investigation.
Getting the failed product to its destination in as-received condition is important to determining a cause of failure. Donan’s Loss Logistics is a pioneer in evidence handling, documentation, and transportation that offers an unbroken chain of custody, as transitions can be rough on evidence.
Strategy #4: Use Your Resources
As we mentioned in Strategy #1, you probably don’t have access to data regarding product failure trends, but many product failure experts do. Serial numbers, dates of manufacture, and causes of failure play a huge part in whether a product is a good candidate for subrogation.
Inspections by licensed engineering professionals in facilities like Donan’s Component Testing Laboratory (CTL) locations are crucial to identifying the cause of failure using objective scientific methods.
Engineers at the CTL use their expertise and resources to identify the cause of failure on tens of thousands of appliances and components every year.
Strategy #5: Make a Confident Decision
Ultimately, the decision on whether to subrogate is yours, but you can’t make it confidently unless you have the facts. Now that you’re armed with the scientifically backed data you need, you’re ready to move forward. Whether you decide on “no subro” or to pursue subrogation, you can be confident that you’ve made the right choice.