1

INTRODUCTION TO PROPERTY AND CASUALTY SUBROGATION

Presented by:Matthiesen, Wickert & Lehrer, S.C.

GoToWebinar Attendee Interface1. Viewer Window 2. Control Panel

INTRODUCTION TO PROPERTY AND CASUALTY SUBROGATION

Presented by:Matthiesen, Wickert & Lehrer, S.C.

2

PROPERTY AND CASUALTY INSURANCE

• Property Insurance– Personal Insurance

• Covers Personal Property and Health• Home, Auto, Other Personal Insurance

– Commercial Insurance• Covers Buildings and Structures – Real Property• Covers Personal Property of Business and Others

– Casualty Insurance

4

PROPERTY AND CASUALTY DAMAGES

• Building (Real Property)– Repair Cost– Replacement Cost– Actual Cash Value– Fair Market Value

• Contents (Personal Property)• Additional Living Expenses• Loss of Rents/Loss of Use/Business Income

5

6

SUBROGATION GENERALLY

• Elements of Subrogation• Origins of Subrogation• Types of Subrogation

– Contractual (Conventional) Subrogation– Equitable (Legal) Subrogation– Statutory Subrogation

• Purpose of Subrogation• Anti-Subrogation Arguments

3

TYPICAL SUBROGATION CLAUSE

“If we pay a claim under your policy, we will takeover your right to recover that amount from anyother person or organization. You agree tocooperate with us and not do anything that willinterfere with our chances of recovery.”

7

8

• Requires Training and Experience• Must Put On Plaintiff’s Hat• Understanding of Tort Law• Prompt Recognition and Action Required

RECOGNIZING SUBROGATION

WHY INVESTIGATE?

• First and perhaps only chance at evidence.• Identify and retain evidence.• Catch witnesses when memories are fresh.• Lock witnesses into positions and testimony.• The time and energy spent on a thorough investigation is

inversely proportionate to the cost of subrogating.• Identify roadblocks (indemnity, waiver, etc.) early.• Is essentially a walk-through of your subrogation lawsuit.• Identify all possible third parties.• Prevent insurance fraud. $20 billion per year.

9

4

LARGE LOSS PROPERTY INVESTIGATION

• Immediate Response by Expert– C & O, Engineer, Surveyor, Etc.

• Obtain All Reports, i.e., Fire and Police• Talk to Fire Marshall or Police Investigator• Obtain Names of All Potential Witnesses• Obtain All Contracts• Consider Private Investigator• Goals of Defense

1) Alternate Cause2) Spoliation

• Goals of Subrogation – See Goals of Defense (Above)

10

11

PICKING UP PEBBLES

PRODUCT LIABILITY

• Design Defect• Manufacturing Defect• Marketing Defect• Identify and Preserve Product• Chain of Custody

12

5

13

PRODUCTS LIABILITY (CONT.)

• Manufacturing Defect: Product bends, breaks, fails, leaks,ignites, explodes, or does something different than asdesigned.

• Design Defect: Product does conform to its plans andspecifications, but the design itself renders productunreasonably dangerous.

• Marketing Defect: Seller fails to warn of product dangers orprovide instructions for safe use of the product.

14

PRODUCTS LIABILITY INVESTIGATION

• Design Defect/Manufacturing Defect/Warning• Immediately Engage Expert• Obtain/Secure Product and Packaging• Detailed Statement of Operator• Who manufactured? Where was the product purchased?• Modifications? Repairs? Maintenance?• Operator’s/Service Manual• Economic Loss Doctrine

15

6

16

17

18

7

19

SELECTING AND HIRING EXPERTS

• When To Hire Expert?• Choosing An Expert• Cause vs. Origin• Reports• Electrical/Mechanical/Chemical/Civil Engineer• Accident Reconstruction/Human Factors• Expert Databases/Referral Companies• Being An Expert In Choosing An Expert• Budget and Cost-Effectiveness

FIRE AND EXPLOSION CASES

• Investigation Is Key• Cause and Origin – Investigation Protocol

– NFPA 921• First Origin, Then Cause• Fire Spread Cases• Fire Response Liability• Sprinkler Systems/Burglar And Fire Alarms• Eliminate Other Causes• Limitation of Liability

20

INLAND AND OCEAN MARINE

• Inland Marine– Not an Oxymoron

• Ocean Marine– Ocean Cargo and Hull Insurance

• Notice of Claim Requirements• Limitation of Liability

– Marine– Ocean Marine

21

8

22

CARGO CLAIMS

• Ocean Shipments– COGSA (Carriage of Goods by Sea Act)

• International Air Carriage– Contract of Carriage (Air Waybill)– Carrier’s Tariff– Warsaw Convention

• Domestic Air Carriers– Virtual Insurer of Goods in Transit– Limitation of liability

EVIDENCE PRESERVATIONAND SPOLIATION

1. Preserve the Scene2. Notice To ALL Potentially Interested Parties3. Schedule a Joint Inspection4. Preserve the Key Evidence5. Establish a Protocol6. Chain of Custody7. Spoliation

– Dismissal– Adverse Inference

23

SUBROGATION AND RESTITUTION

• Burglary, Arson, Theft, Other Crimes• Court-Ordered Restitution• Half of Victims Fail to Claim Restitution• Parental Responsibility Laws• Order of Subrogation Restitution/Abstract of Judgment• File with Court Recorder

24

9

SUBROGATING AGAINST GOD

• Natural Disasters– Hurricanes– Floods– Wildfires– Hailstorms– Ice Storms– Windstorms– Lightning– Roofing Subrogation

25

GREAT FLOOD OF 1993

• Upper Mississippi River Basin• Worst Natural Disaster in USA (cf. Katrina)• $20 Billion Damage• Affected 9 States• 50 People Died• One Flood in Kenosha, WI

26

27

10

28

29

SUBROGATION RECOVERY

$ 7,275,000

30

11

ELECTRICAL FIRES

• Electrical Engineer• Electrical Wiring• Electrical Equipment and Appliances• Site Examination Protocol• Identify Electrical Contractor/Builder• Evidence of “Unusual Electrical Activity”• Notice and Preservation of Evidence• Identifying Defendants/Third Parties

31

BAILMENT

• Bailor/Bailee• Elements• Presumption of Negligence• Exculpatory Clauses• Limitation of Liability

32

OBSTACLES TO PROPERTY SUBROGATION

• Made Whole Doctrine• Economic Loss Doctrine• Statute of Limitations• Statute of Repose• Governmental Liability• Subrogation Waiver/Exculpatory Clause• Landlord/Tenant Implied Coinsured• Insured Cooperation

33

12

PRACTICAL TIPS AND SUMMARY

• Subrogation Is An Investment• Take Investigation Seriously• If a tree falls in the woods….• Tag Large Losses For Additional Investigation• Strive To Be Cost-Effective• Who Else Owns This Loss? • Think Subrogation

34

Gary L. WickertMATTHIESEN, WICKERT & LEHRER, S.C.

Nationwide Subrogation Attorneysgwickert@mwl-law.com

www.mwl-law.com(800) 637-9176