Subrogation as an afterthought
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Mark Mason, a partner with the largest insurance litigation law firm in Canada, McCague Borlack, explains why adjusters should not think of subrogation as an afterthought when adjusting a claim.
Mark Mason: The most common problem that I find is that when an adjuster goes out and adjusts the first party claim, they tend to think of subrogation afterwards; it becomes an afterthought. They adjust the first party’s claim to satisfy their insured’s concerns, then after they’ve done that they think about subrogation. The problem is by the time they think about subrogation, evidence could have been lost, witnesses might no longer be available, so you end up losing opportunities that you might otherwise have. If we could send a message to the adjusters out there it would be to think about the subrogation aspect of the claim at the same time you’re thinking about the first party claim.
In terms of misconceptions I think that often times adjusters think that it’s self-evident what the problem was, what caused the fire, so you can go ahead and get rid of the evidence. A common example is when there’s a motor vehicle loss. Adjusters will have the opportunity to sell the insured’s vehicle for salvage. They don’t think about the implications of doing so in the context of subrogation. They might get a couple thousand dollars for the vehicle, but the result may be a loss of a subrogated claim which could be in the tens of thousands of dollars.
