Subrogation with regard to a fire claim is an extremely effective means of recovering loss expenses. Whether it involves workmanship, product liability, product design or failure to warn, many of the same steps have to be initiated, documented, and properly performed before recovery is possible. For the sake of clarification, let's establish a definitive definition:

Subrogate: to put in the place of another, especially to substitute (as a second creditor) for another with regard to a legal right or claim.

Most claims handlers know exactly how the subrogation process plays out in the wake of an insurance claim. What may be less clear is how to set up your subrogation effort for success by following the right processes and working with the right people.

Educate the insured

Successful subrogation starts the moment the claim is submitted by the insured. This is the carrier's opportunity to communicate on matters related to safety, as well as the importance of preserving and securing the scene. It is human nature to want to return things to normal by removing debris, but that can mean valuable evidence is damaged or discarded.

Work with the right restoration vendor

Today, restoration companies have ever-improving methods for mitigating a loss and restoring property. What they can do is truly amazing and time is frequently a factor. It's not unusual for a restoration company to be on the scene and possibly altering it before the investigation takes place. Items that may look like burned fire debris, but are in fact critical to the investigation, could be easily discarded. Mitigation and clean-up should never be initiated near the area of suspected origin prior to a fire expert's involvement. In nearly every instance, nothing in the area or room of origin is salvageable.

Engage legal counsel sooner rather than later

The sooner legal counsel is integrated into the subrogation process, the better. Some companies may feel it is inappropriate to involve counsel until the initial scene investigation is complete, but unique and exceptional circumstances can arise even before then — including who to choose as a fire expert. Having counsel involved at the inception of the investigation ensures that questions can be answered and issues resolved in a manner that doesn't compromise the subrogation process. As a result, engaging staff counsel or a retained firm to handle all potential subrogation files from start to finish can add significant value to subrogation efforts.

Choose an experienced fire expert

The experience and ability of the fire expert are crucial to the outcome of any investigation, especially one with subrogation potential. Up to date licensure, certification and training are givens, but you also want someone who is:

• Responsive. It's essential that the expert get to the scene as soon as possible and stay in touch throughout the process.

• Willing to enlist the expertise of others. In certain instances, a mechanical or electrical engineer may need to be called in; that involvement helps the fire expert draw the right conclusions and protects the validity of the final report.

• Familiar with and faithful to NFPA 921 and NFPA 1033. This one is key!

NFPA 921 and NFPA 1033 outline accepted practices for the investigation of fires and explosions along with the personal qualifications that are required of fire investigators. It's best to make sure the fire expert can stand up to the rigors defined by these documents.

Know what an O&C investigation should look like

When the fire expert arrives on scene for the first time, it is imperative that he or she initiates the investigation with a completely open and unbiased mind. Avoiding initial theories or rumors related to cause is ideal. While some might say that a random comment pointing to the cause of the fire is a discoverable moment, it can also be interpreted as leading to a biased or corrupted investigation. Here is an excerpt from NFPA 921 2014 Edition that addresses presumption:

4.3.7 Avoid Presumption. Until data has been collected, no specific hypothesis can be reasonably formed or tested. All investigations of fire and explosion incidents should be approached by the investigator without presumption as to origin, ignition sequence, cause, fire spread, or responsibility for the incident until the use of scientific method has yielded testable hypotheses, which cannot be disproved by rigorous testing.

When processing the fire scene, it is imperative the scientific method is utilized in the collection and analysis of the data, as well as the development and testing of the hypothesis. If the conclusion drawn by the fire expert will not stand up to this scientific challenge, the chance for recovery is slim.

Fire origin

Identifying the origin of the fire according to the four accepted criteria listed in NFPA 921 is also important. These criteria include:

1. Witness information — Gathering information and observations from individuals who witnessed the fire or were aware of the conditions at the time of the fire. This may or may not include information from the insureds, since they may not have been present at the time of the fire, but they can provide a wealth of background material.

2. Fire patterns — This includes an analysis of the effects and patterns from the fire.

3. Arc mapping – Analyzing the locations where electrical arcing caused damage and documenting any electrical circuits affected.

4. Fire dynamics — An analysis of the fire dynamics that considers the physics and chemistry of the fire initiation and growth, as well as the interaction between the fire and the building's systems.

The information provided by one or more of these criteria should be deemed reliable, and where the information from multiple criteria confirms the origin of the fire, the better the subrogation opportunity.

The first argument offered by a defendant will likely be, “I don't think the fire started near my client's product or area of workmanship.” If the fire's origin cannot be identified with a high level of certainty, the ignition source and ultimate liability are wide open.

Once the origin is agreed upon, then investigators must determine the fuel package or the first fuel ignited. This can be difficult since the first fuel ignited is often almost completely consumed. This is where witness statements can be of great value. However, investigators should still use caution because people perceive and see things differently. What may look like fire on the floor to one person may look like fire on the sofa to another. The reliability of “what was here” prior to the fire can also be very misleading. Hours can be wasted looking for the remains or components of a device only to find out later from the spouse, child or another occupant that the item was moved prior to the incident.

Identification of potential ignition sources in the area of fire origin must be completed prior to initiation of any action movement or destructive testing of those potential sources. The remains of an item must be present after the fire to confirm it was present prior to the fire and before subrogation can be initiated. Someone saying an item was in the area of origin is not sufficient. Physical evidence is required to support such claims. Therefore, the evidence should be left in place and protected as necessary. An exception to this rule is when the evidence could be tampered with, vandalized, or is in danger of further deterioration (e.g., exposure to the elements or possible collapse of the surrounding structure).

Collection of the potential ignition sources must be done jointly with representatives of the noticed parties present. Sometimes, due to the condition of the fire scene, this is not possible and alternate collection methods must be used. Just because potential ignition sources were removed prior to a joint inspection because of extenuating circumstances, the possibility of subrogation is not lost. Giving all parties an equal opportunity to view the scene and evidence as long as conditions allow is a priority. During the collection of evidence for a potential subrogation claim, it is important that nothing is left behind. If an item is present in the area, it must be either identified as the ignition source or eliminated.

Evidence collected from the area of origin will most likely be severely fire damaged and deteriorated. Documentation of the location of this evidence is crucial to ensuring the location is consistent with witness statements. Extreme care must be used in collecting and packaging fire damaged evidence, as debris is generally fragile and vulnerable to additional deterioration. There must be enough of the item left for identification purposes and to prove the potential ignition source was in the area of origin.

There are situations when enough of an appliance is intact after the fire to successfully identify it with supporting documentation from the homeowner, but the specific component that caused the fire was never found. Successful recovery can be made in these instances if it was known that the suspected component was present prior to the fire and had the potential to be a competent ignition source. The remains of the appliance, witness statements, fire patterns and fire dynamics have all been used to accomplish a recovery. If only the word of the witness was used to determine the origin and no physical evidence was found, recovery would not have been possible.

Remember that everything matters

At the end of the day, every part of the process matters. Vendor selection, evidence preservation and handling, methodical investigation, thorough and complete documentation and reporting — all of these factors can make or break a subrogation case, especially under legal scrutiny.