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Last Post 09/14/2010 5:55 AM by  ALANJ
San Bruno Fire and subrogation
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Leland
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09/13/2010 1:40 PM

     

    This relates to another topic that devolved into some discussion about subro.

     

    Here's a paragraph from a newspapr article regarding the recent San Bruno fire in SFO:

     

    The total damage is expected to cost tens of millions of dollars in insured losses, according to insurance industry officials. If the California Public Utilities Commission finds PG&E responsible for the disaster, the company will owe the amount paid out by insurance companies, plus the deductibles paid by those affected, insurance industry officials said.

    In my opinion, this paragraph is only partly accurate, because it leaves something out.

    Anybody agree that something was left out, what it is, and how an adjuster mentions it in a subro letter?

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    Leland
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    09/13/2010 3:55 PM
    Hint: If you don't address this issue, or know that the insured has addressed it, it can delay payment of a subro demand for months.
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    Ol' Ghost
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    09/13/2010 4:20 PM
    Yeah, what about the UN-insured loss incurred by the folks? And the BI, and lost income, and the ubiquitous pain & suffering? Then's there's the interrupted communications with the Cosmos and the inter-dimensional thought-waves.

    I see lots of lawyers coming out of the woodworks again.

    Ol' Ghost
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    claims_ray
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    09/13/2010 4:25 PM
    PG&E should pay out the backside for this one. There had been complaints of the smell of gas for some time prior to the explosion.
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    Leland
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    09/13/2010 5:41 PM
    Ol'Ghost is right of course.

    The utility probably won't settle the subro demand until they know the full amount of the claim.

    So if the insured had damaged to plants, trees and shrubs, and their dog or cat was killed, the utility would need to know that part of the claim even if it wasn't covered on the first party claim.

    Where this can really slow things down is when there are limits.

    Let's say a plumber started a fire and he had a $100,000 liability coverage. Let's say he is the only liable party. House has $150,000.00 of damage, with a policy limit of $80,000.00. The insured has plants tree and shrub damage of $10,000., and medical bills from getting burned of $7000.00, pain & suffering of $21,000.00.

    Total loss & claim: $188,000.00

    Everybody can get paid 53 cents on the dollar. (100/188) (depending on the state)

    HO carrier makes subro demand for $80,000, gets paid $42,400.00 if everyone is already in agreement with the numbers and prorations.

    If the insured needs 6 months to decide how much their shrubs are worth, add 6 months to the timeframe.
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    Ray Hall
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    09/13/2010 6:46 PM

    You must be working on DP1 only the HO-3 covers trees, plants shrubs and lawn for fire up to a 5% limit and a limit on trees. In the area the HO-3 should be not used up or under the limit. The best way for the poor people in the Absolute Liability case is to get a good lawyer or PA and go for the big bucks, but the gas company would rather all file with the primary hazard and subrogate. Remember this all the members of Arbitration Forum will be involved, and the attorneys sucking up the surgation claims also will not be a factor PG & E is a member.They will have their heavy hittrers (IA,s) on this one for 2 days ago. Probably C & C they have lots of experience in this area. I have lots of experience in this area also (4 years full time) I will fly to Oakland on SW and take about 5 of these off your hands.

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    RandyC
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    09/13/2010 7:16 PM

    I've got some questions on this. I just got off the phone with my daughter who is a federal judge, but she didn't know. She is a social security admin judge.

    First many of the carriers will have replacement cost exposure. The tortfeasor will have Actual Cost exposure, right?

    Question #1: Since Calif. does not allow depreciation of labor (installation labor at least) do they extend this rule to common law liability?

    Question#2: As the insurance company subrogates the claim what duty do they have to collect the monies not a part of their own loss, losses not covered by their policy but additional to covered loss.  What kind of protections does the insured have against a settlement that covers the insurance company's loss but leaves them short-changed?

    Question #3: The insurance company has a relationship with the insured but not with the tortfeasor. The carrier does experience a loss in the difference between what he owes the insured at RCV and what he recovers in subrogation. Is there some standing in equity that creates a liability beyond the common law, or do they just have to eat that difference.

    If these are stupid questions that I should know, I must have been sleeping during my three day class in Texas when they covered this stuff :-)

    Randy Cox

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    Ol' Ghost
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    09/13/2010 7:39 PM

    Question 1. That's one for the judge to ultimately decide.
    Question 2. The carriers don't care about items they don't cover. It will be up to the items owner to pursue recovery on them, that's where the lawyers come in.
    Question 3. In subrogation, the carrier is out to recover what it spent. During arbitration negotiations, the carrier will be out the Recoverable Depreciation it has paid as the utility company will only owe for ACV. If the carrier can recover the deductible, that amount will be disbursed to the Insured by the carrier. This process is usually a rather droll event. However, if the lawyers and their clients can worm in on the proceedings along with some TV cameras, excitement will unfold.

    Ol' Ghost

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    Leland
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    09/13/2010 8:04 PM
    Ray- Your right the DP1 doesn't cover trees, Dp3 does, that's right, you are remembering that I look at things differently because I do so many more DP1's than HO3s. I am not handling any of these claims.

    Here's just a few things the first party insurance will usually not cover:

    pets
    contaminated dirt
    personal injury
    things over sublimits, like guns and furs
    automobiles
    car parts
    deductible
    etc.


    All of these can be claimed by the homeowner directly against the utility.

    Randy

    question #1 I don't know. Maybe Steve knows. Maybe we need an attorney on these forums.

    question #2 I think there are different rules in different states. Sometimes the insured gets "dollar one". Sometimes it gets prorated. I have heard about this but I don't really know, I haven't been an adjuster long enough. Maybe I will try to find out. I do know this: there can be some tension between the insured and the 1st party carrier when they work together to sue the 3rd party. I think sometimes they split costs, or make agreements on how they are going to split the winnings. There can be some tension, say for example if the carrier has a limit of 100k and the 3rd party has a limit of 200k. If the insured says his loss is 300k, then the carrier might recover 66k (200/300 x 100). If however, the insured says his loss is only $150k, then the carrier could recover the full 100k they paid. Obviously if the insured increases his claim successfully the carrier could get less money for their subrogation efforts. But the carrier might be paying for the bulk of the attorney's fees. So this is a very good question, I have wanted to know myself how this works.

    And there is a difference between just normal subro and subro lawsuits. If the carrier is just making a subro demand, usually the carrier will just mention that the insured also may have some direct claims. I am not aware of any legal duty for the carrier to help the insured collect those, but I don't know. I do know that if there is a limits issue (like my plumber example) it might make good business sense to encourage the insured to get their claim in the mix so the subro can go forward for everybody. By the same token I have hunted down invoices from the power pole company on car accident claims so that my subro would not get held up due to a mystery claim that the liability carrier knows is out there but hasn't received yet, and isn't motivated to obtain.

    question #3

    Why would you say the question is stupid? it sounds very smart too me. I hardly understand the question. Good use of vocabulary. I will try to find out.
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    Leland
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    09/13/2010 8:09 PM
    Ol'Ghost- you typed your answer while I was typing mine.

    Question for Ray and Ol'ghost- why does it go to arbitration? Is that some agreement made between the insurance companies ahead of time, to arbitrate disputes? Are they required to go to arbitration by a pre-existing agreement, or can they still go to real court if they want to?

    I have been involved in a subro case or two that did not have arbitration.
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    Ray Hall
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    09/13/2010 9:34 PM

    Randy and others this is why PG& E would like to get all the pain and sifering out of the way, and leave the property losses to the homeowners. The Homeowners adjusters will fall into the ole. we will get it all back mode and you are exactily right. In inter company arbitration all the forms have to presented to the arb board. No oral arguments are allowed. Remember all the members of the arb board are non paid volenteers, most ast. claim managers. This would be in special arb up to 250 k property damage and above with both applicant and respondent agreement (PD only)

    Same background on intercompany Arbitration Board. This has been around for about 50 or more years. When I was a new auto casualty adjuster we would very upset with the direct auto physical writers, GMAC, Calvert Fire, FOMOCO and so forth. The would sub on an accidents to hell with the liability question and hire a lawyer to collect. Well they did not have much to loose as tghey were always the plaintiff and never the defendant as they did not wite auto liability.

    The Arb Board cut all this out, and you better have a good applicates file with lots of attachemnts and case law if needed. Its a great thing. I a member hires an attorney toi sue they have to drop the suit if the other side is a member and 95% of all carriers, large corp. drug mafg etc are members. Companys like Safeway, kroger, and the big box national chains, lots of small governments etc.

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    CatAdjusterX
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    09/14/2010 1:19 AM
    Posted By claims_ray on 13 Sep 2010 04:25 PM
    PG&E should pay out the backside for this one. There had been complaints of the smell of gas for some time prior to the explosion.



     

    "A good leader leads..... ..... but a great leader is followed !!" CatAdjusterX@gmail.com
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    ALANJ
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    09/14/2010 5:55 AM
    Leland:

    I am one of the adjuster / lawyers who still hang around to read these threads. The insurance carrier can only subrogate for what they have paid out under the contract of insurance. The insureds other claims still survive and can be made against the gas company. As Robby pointed out. These guys are going to pay out the a** for this. I'm sure the lawyers had a heard of experts out there preparing their reports as soon as the fire was put out. The cost of everything is higher in CA.
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