Ever wonder why no one has ever subrogated for the cost of an engineer’s report or for attorney’s fees when presenting a claim against a tortfeasor? This article provides an excellent answer and reason to include these costs in your recovery efforts.
Subrogating For More Than Your Insured’s Property Damage
Property insurers along all lines could simplify their business practices and lower their overhead considerably by simply paying any and all property damages, claims, expenses and consequential damages alleged to have been incurred by and in the amounts claimed by their insureds. Obviously, such a practice would be a shortcut to insolvency and would lead to a proliferation of claims fraud and loss exaggeration. The industry has a claims adjusting process for a good reason – it is important to competently determine coverage, assess legal liability, settle a claim fairly, and investigate third-party subrogation potential. Insurance benefits society and our economy not only as a financial mechanism to provide indemnity on covered losses, but also to ensure peace of mind and swift closure after a loss has occurred.
Insurers, focused on profitability and the bottom line, are aggressively pursuing subrogation of property losses whenever possible, recouping both their claim payments and their insureds’ deductibles. But what is only now coming into focus is an effort by our industry to subrogate not only for its claim payments, but also any and all Allocated Loss Adjustment Expenses (ALAE) incurred in and necessitated by the claims handling process. The law in this area has been slow to develop, but progressive carriers are more and more insisting on recovery of their claims expenses from responsible third-party tortfeasors.