How to Maximize a Claim’s Subrogation Potential
July 26, 2022
A Guide to Properly Preserving Evidence
Based on 1000 random investigations in the past 10 years, about 36.5% of our cases were undetermined. Undetermined cases are typically due to a lack of or insufficient physical evidence to meet the burden of proof for court cases. This makes evidence preservation a crucial component of each investigation we conduct.
Time is of the essence when it comes to subrogation. As more time passes with the evidence not secured, the risk of compromise increases, resulting in decreased negotiating power. Therefore, it is crucial to get control of the scene and evidence as swiftly as possible.
Figure 1: An illustration of the golden rule: Time is (subro) money!
There are competing interests when handling a claim. First, you must start mitigating the loss, getting scopes, and working on your repairs and losses schedule. You also need to consider subrogation because a masterfully handled claim indemnifies the insured and the insurer.
How to successfully secure and preserve evidence
- Respond to the scene as soon as possible.
- Establish and maintain scene security and continuity.
- Arrange appropriate security. To do this, you need to consider the size and type of the building. Proper security prevents entry into a scene and subsequently prevents the altering of evidence.
Evidence preservation in water losses
Water losses slightly differ from fires. In water losses, the evidence is not altered by post-incident events like in the case of a fire. Rather, evidence is typically altered by the owner and the installer. However, evidence needs to be preserved to ensure a successful investigation.
Key guidelines to follow in water losses
- Decide if a forensic expert is needed for your claim.
- Contact a forensic expert before any work is conducted.
- Preserve the site and evidence in “as is” condition.
- Do not allow removal and/or repair of the evidence until it is properly documented, or a forensic engineer is attending the site.
- Take photographs of the site/evidence and the surrounding environment. If the insured has replaced the failed component, ask them to take photographs of the failed component and keep the evidence securely until you take possession.
Figure 2: A chart illustrating the impact of quick evidence security on subrogation potential.
When a loss occurs, one key factor to consider in administering your claim is time. Your risk of compromised evidence increases as time passes, whereas the negotiating power decreases. Therefore, securing your evidence also secures your subrogation potential.
How to document and photograph a scene effectively
Generally, experts are trained to take photographs in groups of three. First, start with a large overall image of the subject. Next, capture a closer field to narrow the focus on the subject. Finally, get close up to the point of interest and take a photograph of that component. This gives us context and effectively documents a scene for us.
Key photos to capture
1. The overall loss location
Figure 3: A view of the loss location for confirmation of address.
1. The area of the incident
Figure 4: The large unfinished basement where an incident occurred.
3. The component or appliance
Figure 5: A close-up of a component that failed and caused damage.
4. Additional photo angles and magnifications
After taking these three main photographs, you can take pictures from as many angles as possible. This will provide an overall view of the evidence and the surroundings.
Figure 6: A close-up of a component that failed, identified through the red arrow.
In the instance documented in figure 6, the failed component was a plastic fitting on one of the water inlets of the water softener.
Figure 7: An even closer view of the failed area.
5. Appliance and component labels
Oftentimes, components and appliances have manufacturing labels attached to them. It is very important to document those labels because they offer information such as the model number, serial number, and sometimes the manufacturing date.
Figure 8: The manufacturing label attached to a component, indicating the manufacturer’s name, model, and serial number.
Some appliances have maintenance or inspection tags attached. These offer useful information regarding the service history and the company or contractor who performed the maintenance or previous repair. The warning labels often affixed on an appliance or component are equally important because they offer useful information.
It is important to document the evidence during and after removal. Ensure that the removal is conducted by a certified plumber or a professional engineer and that the evidence is not altered during the procedure.
At times, evidence removal is wider than the failed component. Therefore, components from upstream and downstream of the fracture location may need to be removed for further examination. This further highlights the need for a forensic engineer to prevent the spoliation of the evidence.
Differences between useful and not-so-useful photos
Example 1: Lack of context
Figure 9: The photograph of a small fire in a living room, sent to our team by a contractor.
One cannot extract any information that may suggest the cause of the fire. There was no context on where in the living room this photo was taken, and there were no close-ups of the objects that might have caused the fire.
Example 2: Full context provided
Figure 10: The condition of an inline oil filter associated with an aboveground fuel oil storage tank.
The picture in figure 10 was taken by the homeowner at the time of the loss. The filter’s canister was removed and is visible in the left corner of the image. There is also a significant ice block encasing the filter. We were involved in this claim months after the incident, and the weather conditions differed. Therefore, the photograph provided compelling evidence of the water in the filter at the time of the loss. Without this picture, freezing would have been slightly difficult to prove. Hence, we consider this photograph very useful.
Example 3: Pre-destruction image
Figure 11: The condition of a solar panel after it failed while in service.
This photograph clearly illustrates the failed beams and the failures’ locations. Due to the damage in figure 11, the structure had to be brought down for safety before we attended the site. With the structure being partially disassembled before our arrival, finding the incident fracture areas would have been more difficult. Therefore, this photograph was useful.
Example 4: Missing site photographs
Figure 12: A float switch from a claim involving water damage to a residence due to a sump pump malfunction.
No site photographs, including the condition of the pit, were available. Additionally, no photographs of the sump pump were available because it was discarded before the adjuster arrived on the scene. The only photograph we received was a float switch and a section of the associated power cord. Owing to the incompleteness of the evidence, this image was considered not-so-useful.
How do you know you need a forensic expert?
You need a forensic expert if you do not know how the loss occurred. This was often the case when no one was home at the fire. Other indications that you need an expert are as follows:
- You do not know why a loss occurred.
- You want to investigate the possibility of subrogation. If you think someone is liable, you need to prove it. This requires an expert. Decrease your time pursuing subrogation and equip yourself with the necessary documentation to substantiate your position.
- There are suspicious circumstances under which a loss occurred.
- The opposing party has already engaged the services of a forensic engineer. We will validate or refute their technical opinion in these cases by reviewing your findings and additional evidence.
- The file might potentially end up in litigation or is already in litigation.
- Large losses.
- Losses involving personal injury or death.
Protecting yourself from accusations of evidence spoliation
You need to document the condition of a scene with photographs, videos, and notes, thereby preserving the physical evidence in situ. Contract an expert to conduct the investigation, keeping in mind that the scene examination may need to be put on hold as evidence may be uncovered to identify the cause. At that point, you have the start of your potential subrogation process.
The expert can identify interested parties, along with those filing the claim. Notify interested parties and invite them to examine the scene. You need to warn interested parties fairly to arrange for their experts to attend to the scene before any alteration of the evidence.
You also need to secure items that were the cause of the fire or the incident and items that were close to the area of origin that may have been eliminated during the scene examination. These will be needed by other interested parties for examination by their own experts.
You can also protect yourself from the spoliation of evidence by thoroughly documenting the failed component or appliance in situ. This will allow other parties to verify the condition of the evidence. You need to document the position and the surrounding environment at the time of loss. Take close-up photographs of any marking labels.
If you need to remove the evidence, then document the component or the appliance before doing so. Most importantly, prevent mating of fractured sections to see if they fit.
Standards for forensic engineers to follow
Your experts need to follow specific standards and guidelines when conducting their investigation. We primarily rely on American Society of Testing Materials (ASTM) standards in our work. Some of these standards dictate how we conduct ourselves in an investigation for possible subrogation.
One of these standards dictates that an expert has to “notify their client that an examination of a scene may likely lead to the alteration of a nature, state, or condition of the evidence to preclude or limit additional examination or testing of the evidence by others.” The expert must recommend to the client that they need to notify other interested parties for the possible involvement in the cause of the incident. And finally, the expert must recommend to the client that other interested parties be given the opportunity to participate in such future examinations of pertinent and important information and evidence.
Examples of evidence spoliation
1. Spoliation in a furnace
Figure 13: An example of evidence spoliation in a furnace.
The red arrow in figure 13 points to a copper coil inside a failed welding surface that caused significant damage to a residence. By the time we attended the site, somebody had cut the affected pipe section from the furnace, making it very difficult to reach a conclusion. Although we suspected freezing was the cause of the incident, it could not be definitely proven.
2. A riser located in an apartment building
Figure 14: A failed riser associated with the HVAC system.
Shortly after the installation, the riser failed by separating at the solder joint. Therefore, we could not prove the cause. Unfortunately, the installer was called in, and they fixed the affected pipe section before we arrived on the scene. In the process, they altered the evidence.
3. An oil spill
Figure 15: A portion of the fitting to which a shutoff valve was attached.
After an oil spill occurred, the homeowner removed the valve and the fitting. In so doing, they created additional significant damage to the part, obliterating the original features. Fortunately, the mating parts, including the shutoff valve, were available. Therefore, we were able to determine the cause of the oil spill.
Examples of properly preserved evidence
1. Failed shower valve
Figure 16: The area of failure, with the red arrow pointing towards the incident shutoff valve.
Significant water discharge occurred from the shower valve shortly after it was installed. The restoration company cut the drywall. The incident shutoff valve was left in as-is condition. This proper preservation of the evidence allowed us to document it properly.
Figure 17: An overall view of the valve and hose that disconnected from one of the ports.
To protect yourself from the spoliation of evidence, we recommend asking your client not to allow changes in the condition of the evidence, if possible. This includes removal or transportation from the site. If the evidence is removed, prepare a chain of custody to maintain continuity. The chain of custody document should include:
- The date and location of the incident.
- If available, a short description of the component, including the manufacturer’s name, model, and serial number.
- Have all the challenging parties review and sign the document.
- If possible, attach a photograph and retain a copy.
It is important to protect your evidence from being spoiled by others. Never give up control of your evidence because it will be impossible to conduct further examination without it. In case we cannot be on-site, you should be present and supervise the removal procedure.
The evidence needs to be protected, not only during removal but also during handling and transportation. We suggest taking all the necessary steps to protect the evidence from further physical damage while interacting by properly packing it in protective materials. If the evidence is large, use crating when shipping it. You can pack and wrap smaller components in bubble wrap, preventing damage while the component is in transit.
How to identify interested parties
Claims often involve several components, resulting in a need for multi-party involvement. Therefore, it is necessary to identify potentially interested parties in the investigation. Your expert can examine an appliance’s remains to identify a component’s manufacturer.
The owners may also have information that might identify the manufacturer. They might have user manuals, the shipping box in which the appliance came, or receipts. These can assist us in identifying the manufacturer of the equipment.
Suppose a fire occurs in a residential setting where several homes were built by one developer, and some of the appliances were sold to the homeowners by the developer. In that case, it is possible to identify the manufacturer of a piece of equipment that is fire damaged with no branding remaining.
The evidence is typically less damaged in non-fire-related claims; the manufacturer labels usually survive the loss.
Figure 18: An inspection tag attached to the vent pipe of an oil tank.
Labels and tags attached to the evidence provide useful information and can help us identify interested parties in a particular claim. Figure 18 shows the name of the company who performed the inspection and the last date of the procedure.
Figure 19: A manufacturer plate attached to an oil tank.
Figure 19 shows the name of the manufacturer, serial number, manufacturing year, and compliance with applicable standards.
A manufacturing label can provide the model number of the product, the serial number, and the manufacturing date. In some instances, similar labels could provide the address of the manufacturer and compliance with applicable standards.
Figure 20: An inspection tag that was attached to a fire suppression system.
The tag in figure 20 shows the company who performed the inspection and maintenance and the last date when such a procedure was conducted.
Figure 21: A close-up view of a section of a braided hose with the manufacturer labels still attached.
The name and physical address of the manufacturer, as well as the product catalog number, are identifiable in figure 21. On the other side of the label are symbols showing compliance with applicable CSA or UPC standards. If the label is missing on such components, then the manufacturer’s name, initials, or CSA or UPC number or code could be stamped on the print. The markings on the print also enable us to identify fake products.
The forensic engineer’s investigative process
Although some failures appear similar, our notes and examinations are not. To reach a definite conclusion, one needs to apply methodical planning and execution of the investigation process from start to completion. Planning and execution are crucial to successful failure analysis. There are very few instances wherein the conclusion is straightforward. Although no two examinations are alike, there are some basic steps involved.
1. Preliminary examination
Once the evidence is removed from the site, it is brought to our lab for a preliminary examination. We can conduct visual examinations through stereo microscopy. We also do physical measurements and identify the product.
Figure 22: One of our labs with a microscope.
2. Higher-magnification microscopy
Once the preliminary examination is completed, we move forward to use Scanning Electron Microscopy (SEM), one of the most powerful tools available for a forensic engineer. SEM allows the examination of features that are not visible through the naked eye under a stereo microscope.
SEM also offers the advantage of providing surface chemical analysis, which can help detect surface impurities, for example.
Figure 23: The fracture surface, as seen on the stereo microscope (right) and under SEM (left).
The stereo microscope is limited to magnification up to 40 times. In contrast, the scanning electron microscope can provide magnification of 50,000 times or even more. The SEM image shows features not visible on the stereo microscope, including the fibres within the component. These cannot be observed on the stereo microscope due to the light reflection.
While SEM remains a crucial component of our investigations, it has a disadvantage. SEM requires a smaller sample, resulting in the need to cut the component. Therefore, it cannot be completed without destruction.
3. Chemical analysis
The methods used for chemical analysis vary depending on the material of the component, amongst other factors. Different methods for chemical analysis include FTIR, DSC, TGA, and GC-MS.
Chemical analysis of a metallic component could provide information on whether a metal or alloy is built according to the manufacturer’s specifications or the applicable standard. The chemical analysis allows us to determine if a proper material formulation was conducted in the manufacturing stage. It can also help us determine if the material contains impurities or was chemically degraded while in service.
4. Mechanical analysis
Often, one needs to determine if the material meets the manufacturer’s specifications in terms of mechanical properties. In such instances, we usually conduct mechanical testing. The obtained data is compared with the manufacturer’s specifications and the specifications outlined in the applicable standards. Mechanical testing is also considered destructive in nature because a specific sample needs to be prepared.
5. Metallurgical testing
Figure 24: Evidence obtained through electrical arcing (left) and stress corrosion cracking (right).
Metallurgical examination of microstructure for metallic components provides a decisive answer if the failure mode is associated with a metallurgical deficiency. Without conducting a metallurgical examination, we cannot prove instances where an electrical arc event or stress corrosion cracking is involved in the loss.
6. X-ray imaging and radiographs
Figure 25: A failed track light with the X-ray image indicating the failure point.
We can also conduct a nondestructive examination of equipment or appliances through X-ray equipment. X-ray imaging enables the location of the failure point without dismantling the component or equipment.
Challenges your experts may face during examinations.
While it is not very often, there are instances where we face real challenges when trying to conduct our examination. These include:
- Unreasonable delays of the examination to get close to the two-year limitation period.
- Refusal by other experts to share site photographs and/or background information.
- Decline by other experts to participate in the examination but forbidding us from conducting a destructive examination.
- The other party asks for the parts, components, or appliances. This results in a loss of evidence.
- Limited time for site examination. Sometimes, your expert may be given only 10 minutes for the site examination.
- Denied access to the site. In one instance, our request to access the site for examination was denied. The homeowner left the evidence hanging on the doorknob, which could have led to the evidence being altered or stolen.
Regardless of the type or size of the loss, your expert investigates the incident with the same methodology and process.