When property damage occurs, an insurance claim can help a housing organization repair the damage and move forward. But when another person, company, or product is responsible for the loss, the claims process can continue even once repairs are underway.
Through a process known as subrogation, HAI Group may recover costs from responsible parties. While policyholders may not hear much about subrogation until a loss occurs, it can provide meaningful financial benefits, including the potential recovery of all or a portion of a policyholder’s deductible and an improvement in their overall claims experience.
What is subrogation?
Subrogation is the process through which an insurance company seeks to recover claim costs from another party that may be responsible for all or part of a loss.
Consider a vehicle that damages a housing organization’s building. HAI Group may, subject to the terms of the policy and other considerations and factors, cover the claim, while also investigating the circumstances surrounding the accident. If the driver is responsible and has applicable insurance coverage, HAI Group may pursue the driver or their insurance carrier to recover some or all of the costs associated with the claim, according to Ryan Bartolotta, HAI Group claims examiner.
“Subrogation is one of those parts of the policy that is a great benefit to anyone who carries an insurance policy, and it’s a little-known aspect of a lot of policies until something happens,” Bartolotta said.
How HAI Group identifies opportunities for recovery
Subrogation starts with understanding what happened. HAI Group’s Claims team actively evaluates property claims for potential recovery opportunities throughout the claims handling process. The team looks at who or what caused the damage, whether another party was responsible, and whether insurance coverage or other avenues for recovery are available.
Potential subrogation opportunities can arise from many different circumstances, including, but not limited to:
- A resident causes a fire and has renters insurance.
- A vehicle crashes into a building.
- A contractor causes property damage while performing work.
- A defective product causes a fire or other damage.
If there is an opportunity for subrogation, the Claims team can begin pursuing recovery as it continues handling the underlying claim. And that value can add up—Claims has recovered millions of dollars through subrogation over the years, helping offset losses.
Why subrogation matters to policyholders
A successful recovery can do more than return money to the insurance company. Depending on the policy language, circumstances and applicable state regulations, a policyholder may recover all or a portion of its deductible.
Subrogation can also reduce the net cost of a claim. Michael Pepe, assistant director of property claims at HAI Group, offered a simple example: If a loss totals $100,000 and HAI Group successfully recovers $80,000 from a responsible party, the net loss is reduced to $20,000.
HAI Group Claims team is consistently working on policyholder’s behalf to investigate losses, identify potential sources of recovery, and pursue responsible parties when appropriate.
Subrogation in action
One HAI Group claim demonstrates how important the details surrounding a loss can become. A policyholder experienced a fire involving a cell phone that was charging. The phone had not previously been repaired or altered, and the resident was using the manufacturer’s charger and cord. An investigation determined that the phone’s battery contributed to the cause of the fire. Because the Claims team was able to establish information about the product and the circumstances surrounding the loss, HAI Group pursued the manufacturer and ultimately secured a recovery.
This claim also illustrates why documentation can make such a difference. Product-related claims can be more difficult to pursue when there is no receipt, if its origin cannot be established, or if the damaged item is no longer available for examination.
Help preserve opportunities for recovery
Policyholders play an important role in the pursuit of subrogation. Two of the most important steps are simple: report losses promptly and preserve evidence.
“The sooner they notify us of the incident and the more preservation of the scene or evidence there is, the easier it is and the more likely we are to successfully recover,” Bartolotta said.
Following a loss, policyholders should:
- Report the claim to HAI Group as soon as possible.
- Take photos and document the damage.
- Preserve damaged equipment, components, and other physical evidence.
- Retain relevant police and fire reports.
- Keep receipts and other available product documentation.
Preparation before a loss matters, too. When hiring contractors, housing organizations should consider working with licensed and insured professionals, obtaining certificates of insurance, and maintaining contracts with appropriate provisions, including but not limited to, indemnification and hold harmless. If a contractor causes property damage, this documentation may help provide another avenue for recovery.
More than paying a claim
For policyholders, subrogation is one of the benefits of insurance that often operates behind the scenes. HAI Group’s Claims team does more than assess damage and issue payment following a covered loss. It also examines what caused the loss, who may be responsible, and whether there is an opportunity to recover costs.
There is never a guarantee that a subrogation effort will result in a recovery. But timely reporting, strong documentation, preserved evidence, and a thorough investigation can give the Claims team more tools to pursue recovery.
For more information about subrogation and the support available to HAI Group policyholders throughout the claims process, contact your account executive.
