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Last Post 11/25/2009 6:15 PM by  Leland
How would you solve this subrogation challenge?
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Leland
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11/24/2009 10:59 PM

    I haven't started a topic in a long time, maybe we can start some new topics with problems adjusters run into and discussions on how to solve them.

    This is a fairly common problem, with a fairly simple solution that is often overlooked:

    You have adjusted the first party claim for Mrs. Smith, whose house was hit by a car insured by Acme insurance. You have made a subrogation demand against Acme for $8345.00 plus Mrs. Smith's $200.00, for a total of $8545.00. Acme has accepted liability but three months later they haven't paid the subro demand because a street light was also damaged and they haven't received a bill from the county government for the streetlight repairs. Acme is unwilling to pay until they know the amount of all of the claims because there might be a "limits issue", since the vehicle property damage policy limit was only $15,000.00.

     

    What could you do to resolve this problem? (There might be 20 different correct answers,  the solution I used was very simple but might not always work. I would love to learn if there's a different solution than I came up with)
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    Ray Hall
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    11/25/2009 10:51 AM

    Great topic. I would file arbitration with AF which could make the call in lest than a month(assuming they are a member)
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    dcmarlin
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    11/25/2009 2:39 PM
    If I were ACME, unless there is a statute or company policy requiring subro to be paid pro-rata, I would pay the ACV of Mrs. Smith's claim and send a letter to the insured advisng them of the possibility the loss may exceed the policy limt so they can act accordingly. Who knows, ACME may never receive a subro demand from the owner of the street light. My thought: first come - first serve.
    Gimme a bottle of anything and a glazed donut ... to go! (DLR)
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    wscook
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    11/25/2009 3:58 PM

    I would sue the city for installing the light post to close to the highway.

    William S Cook Public Adjuster/Umpire/Appraiser
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    Medulus
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    11/25/2009 5:48 PM

    As the Acme adjuster, I also would want to make sure all parties signed off before releasing any of my limits. The first duty is to protect the insured. That includes doing everything you can to settle the claims and obtain a release for the amount of the limits or less.  The Acme insured should still be informed in writing that there is a potential claim in excess of the limits.

    It is also possible that the Acme adjuster is one of the many lazy adjusters out there who simply wait for things to come their way instead of pursuing the documentation. So, as the adjuster for the IA I would consider contacting the municipality myself, obtaining the invoice for municipal property, wrapping the damages up in a bow and presenting it to the Acme adjuster with a note that said, "Now pay me!...or incur interest from this day forth."

    Steve Ebner CPCU AIC AMIM

    "With great power comes great responsibility." (Stanley Martin Lieber, Amazing Fantasy # 15 August 1962)
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    Leland
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    11/25/2009 6:15 PM
    That's basically what I did. One of the problems I have in the Los Angeles area is nobody knows which police department responded, which government agency is responsible etc.

    I went on the internet and found the Los Angeles Bureau of Street Lighting, which has a complaint form for street lights that aren't working. I filled out the form, giving them the closest intersection, and asking for a copy of their bill for the repairs. Lo and behold, a day or two later, I got the bill and forwarded it to "Acme" who then made an offer to settle with my carrier.

    But I have a lot of questions about this- what if the city never did a bill? Does Acme have the right to wait forever and not pay? Can the city's potential claim be estimated, and a successful suit made in small claims (or real court?)

    If an estimate was made for the MOST the light could cost was prepared, and then prorated with my carriers claim, would that then be an "undisputed" amount that Acme would be obligated to pay?

    Which brings up another issue that I've never really seen addressed. We know that California insurance companies have a duty to follow Fair Claims Practices even when dealing with 3rd party claimants, but what about dealing with other insurance companies, including other insurance companies that are at least partly representing third party claimants (trying to collect the victims deductible)

    I don't think arbitration works because there is no contract between my principal and Acme.

    Maybe some sort of "interpleader" court filing would be required- "we can't get paid because there is a lack of agreement between two other parties..."

    Steve- good point about demanding interest, I didn't think of that. Does that work?

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