Subrogating Freeze Claims
Tough decisions must be made relative
to the investigation of frozen pipe subrogation cases. The first item of business
is normally stopping the leak and beginning remediation. In doing so, however,
can the potential subrogation claim be
Spoliation: Take comfort that stopping
the leak will not be spoliation of evidence,
but rather viewed as mitigating the loss.
Almost any action taken after a loss occurs can be “tenuously argued” as spoliation of evidence. However, common sense
and developing guidelines recognize that
investigating any loss requires movement
of evidence and/or alteration of the scene.
As one guidebook states, “in and of itself,
such movement of evidence or alteration
of the scene should not be considered
spoliation of evidence.”1 Contractors are
usually in a hurry to restore the system
to ordinary operations, and they are not
concerned with preserving the damaged
evidence. The contractors need to be advised to preserve the evidence.
Identify and Preserve In order to preserve a potential pipe freeze subrogation
claim, the first thing that needs to be done
is to stop the flow of water. Thereafter, if
possible, preserve the failed pipe, fitting,
valve, etc., in their original condition. If
possible, take pictures of the evidence in
its original condition before emergency
repairs are performed. Try to avoid altering or damaging the evidence during removal. Document how the evidence was
removed and any observable damage. It
may be necessary for evidence to be removed from the scene in order to protect
and preserve its integrity. In addition, it
may be necessary to partially disassemble
the evidence to determine if that object
contributed to the loss. Steps taken to
protect the evidence and to identify potential responsible parties should not be
considered spoliation of evidence. 2
Consultant: Selection of an appropri-
ate consultant is also critical to a water or
freeze loss subrogation claim. Is a plumb-
er necessary? A metallurgist? A mechani-
cal engineer? A fire protection engineer
or sprinkler expert? The type of water loss
impacts expert selection, as does the loss
amount. First, start with a basic investi-
gation to identify the source of the water.
Once the source is identified, selection of
an appropriate consultant can be made.
This decision, if time allows, should be
made in consultation with your subro-
gation counsel. Be careful to advise your
initial consultant not to disturb the failed
device unless it is absolutely necessary to
stop the water intrusion.
Notice: Prompt written notice to potentially responsible third parties is essential, especially with respect to utility
companies and municipalities that often
have strict notice requirements. Assuming emergency repairs must be performed
before notice is provided, make reasonable attempts to preserve the failed pipe,
fittings, valves, etc., for future inspections. If the responsible parties cannot be
identified until an off-site examination
is conducted, so be it. The idea is to take
reasonable steps to preserve the evidence,
if possible, for future inspections by interested parties.
Document the Scene: You can never
take too many photographs or video of a
water loss. Water damage can be very difficult at times to document photographically. Thus, take extensive photographs
(or ask the insured and/or his repair contractor to take photographs) of the area
of origin before emergency repairs are
performed. If possible, have the insured
and/or the insured’s repair contractor
photograph the scene during emergency
repairs. Take photographs that depict not
only the origin of the loss, but also the extent and scope of damages.
Mold: Water losses also can lead to
mold complaints. The scientifically sup-
ported health effects of mold continue to
undergo study. The differences in human
sensitivities to mold make quantifying
any hazard difficult. An industrial hygien-
ist or indoor air quality specialist may be
needed to determine if the existing envi-
ronment is acceptable for normal human
occupancy. Please note that mold growth
occurs when spores, sufficient moisture
and nutrients exist. Further, temperature
plays a vital role in mold growth. Dry-
ing the area is essential to combat mold
growth. A contractor who has experience
in properly drying and dehumidifying
property should be consulted. Make sure
the contractor has liability insurance.
There is always a risk that the contractor
will make the damage worse by spreading
mold in the drying process.
By keeping the above-noted issues in
mind when evaluating a water loss, you
will maximize your opportunities in preserving your subrogation claim.
1. Consider retention of legal counsel to
supervise the subrogation investigation.
This will enable the adjuster to focus on
immediate adjustment issues.
2. Consider immediate engagement of
experts (may require hands-on trade person, such as a sprinkler installer, plumber,
fire protection engineer, mechanical engineer, metallurgist, etc.)
3. Document the scene with photographs, the more the better, taken as soon
after the occurrence as feasible.
4. To the extent possible, obtain and
preserve the failed or broken portions of
the system (e.g., broken pipes, cracked
valves, fittings, etc.).
5. Determine the nature and type of
heating system that may have failed or
shut down and the reasons why.
6. Where tenants are involved, obtain a
copy of the lease agreement to review for
contractual legal obligations, exculpatory
clauses, waivers of subrogation, etc.
7. Get names, dates, details and written
documentation of recent work performed
by a third-party contractor as well as regular, yearly maintenance performed by
fire sprinkler contractors.
8. Obtain plans and blue prints of applicable system that failed (plumbing,
sprinkler, HVAC, etc.)
9. Determine the date of the installation of the system that failed and the
entity responsible for the location and
amount of insulation or protection afforded the system. This is particularly important, because virtually all states have
statutes of repose that could impact your
10. Obtain meteorological information. Counsel or experts can obtain U.S.
weather information from local reporting