Historically, fires and automobile accidents have been the primary types of property and casualty claims that presented a potential avenues of for subrogation. However, with the increased costs of mitigating the extent of water damage and reducing the potential for mold growth, claims involving large water losses have become another important area with subrogation potential.
Large water loss claims often involve the failure of an appliance such as a water heater or washing machine, or a water connector or valve due to a material or manufacturing defect, or installation error. The nature of such losses requires the failed item to be removed and preserved as evidence for review by an expert for the insurance company, as well as by technical personnel from the manufacturer or installer. If the subrogation case proceeds to trial, the item will have to be produced as physical evidence. Therefore, determining the probable cause of a water loss requires the identification, retrieval, protection and examination by a knowledgeable expert of all available evidence involving the water loss. Since most water losses require prompt action to repair and restore the water damage, the evidence needed to determine if subrogation exists is often overlooked or mishandled.
To ensure an objective investigation, preservation of evidence is key. The first step in the process is to identify the item that has failed. In most cases this will be obvious based upon a readily apparent break or fracture in a plumbing line or fixture. The role of the claims adjuster is essential in the identification process because once the report of the loss is received, the insured must be instructed not to remove or disturb the area if at all possible. Otherwise, the removal of an item may change the material condition of the item or eliminate an apparent improper installation. A common example is the failure of an ordinary household item such as a water connector to a toilet that is to be hand tightened only. If the insured uses a jawed tool such as pliers or channel locks to remove the item, it could remove or obscure evidence of prior over-tightening with a tool. Improper removal can therefore cause collateral damage that can mask the cause of the failure.
Before removing any items in the area of the loss, color photographs of the area should be taken. The expert reviewing the claim needs the color photographs in order to provide information on the specific use and installation of the item. Photographs can tell an expert if the item was placed under undue stress by the installer by twisting and kinking an 18- inch flexible connector when a 12- inch connector would have been more appropriate. Color photographs also aid in identifying the type and location of the connections, fittings and valve positions. Due to thermal cycles of expansion and contraction, water losses on hot water service lines are more common. In some cases, it is important the expert reviewer knows the direction of flow in the failed plumbing fitting or line. In the case of a washing machine, it is important to photograph the control panel to document the specific water level and temperature setting and the point in the cycle that a failure occurred. This information is useful in testing the appliance for a systemic failure.
Photographs of the installation are also needed when the item under investigation is tested in the laboratory and does not fail. In such cases, laboratory testing reveals the cause of the water loss was improper installation or else quite possibly, the wrong item was removed and shipped for examination.
During the photographing process, the claims adjuster should also interview the insured to get background information on the nature and extent of the failure and the failed item. Useful information includes the age of the home, the date the failed item was purchased or installed, the place of purchase, the name of the installer, and any available manufacturer model and serial numbers.
A key part of the photographing process is the identification of other similar items in the residence that have not failed and that may be useful as an exemplar. Product item markers or labels on such items may be useful in identifying the other item in the home that had failed but is otherwise unidentifiable as to manufacture, model or serial number. Similar items installed at the same time and exposed to the same service conditions as the failed item may also be showing similar signs of failure. The most extreme example of this possibility involved the failure of a compression nut on a toilet flush valve on a downstairs powder room toilet on a $250,000 four year old home. The claim amount exceeded $35,000. A check of the same item on the downstairs master and upstairs guest bathroom revealed identical fractures and imminent failure.
Once the item or area of the failure is properly photographed, the items can be removed. If possible, it is preferable to have the item removed by the expert reviewer if the loss location is convenient and cost effective. This reduces the number of people involved in the all important chain of custody for the evidence. Where an expert reviewer is not readily available, some insurance companies have established agreements with plumbing companies that have been trained on the proper documentation and removal of items often involved in water loss claims. A plumber that is not properly trained in the removal of evidence increases the probability of collateral damage that can mask or removes the signs of failure. For example, a failed fitting or section of copper tubing should be cut out of the line with a tube cutter and not by heating the tubing at a sweated fitting. A case involving a PVC transition fitting to a copper line was affected by a plumber who heated the sweated connection on the copper tubing next to the PVC fitting, causing it to char and melt, and therefore damaging the evidence.
In some cases involving a failed item that has come apart, such as a faucet or valve, it is important that all the loose pieces of the failed item be collected. It is not unusual for an expert to receive claims requiring investigation and discover that all the pieces of the evidence are not available for review.
For large appliances such as washing machines and water heaters, an outside service is often required to not only remove the item, but to properly pack and ship the item it to the expert reviewer. The manner in which the item is packed and crated is key, as demonstrated by a ceramic toilet tank that arrived with a request for the expert reviewer to determine what caused "the" crack. However, upon arrival, the box contained several small pieces from the shattered toilet tank. Good clear photographs of the item before it was packed for shipment would have been helpful, but none had been taken.
Proper handling of the evidence is important when there are items that have cracks or fractures, particularly since the nature and extent of the failure is often based upon an analysis of the fracture or failure surfaces by a material specialist. The natural tendency is for a person to try and match up the separate pieces of a fractured item. The process of rubbing the fracture surfaces together can remove or distort the fracture surfaces and make a determination of the type of stress involved and the point of origin difficult, if not impossible.
As mentioned previously, the chain of custody begins with the removal of the item from its place of installation. The change of custody between the various parties must be clearly documented with times, dates and signatures. It is wise for individuals taking custody of an item to photograph the item upon receipt and transfer in order to guard against accusations that the time item was changed or otherwise damaged during the time it the item was under their control. This is especially true for items containing several small parts or pieces that can be lost in the packing process. The shipment process should be by a trackable, traceable, and require receipt signatures. The various overnight express packing and shipping companies have proven to be reliable and cost effective in this regard.
If a successful subrogation action is to be achieved, all parties must remember that the physical evidence to support the action must be properly identified, photographed, removed and transferred with a solid chain of custody. When faced with a water loss, the claims adjuster should make a decision as to whether the nature and extent of the loss warrants further examination as to origin and cause. The cost to remove and ship a failed item with subrogation potential to a knowledgeable expert for a non-destructive examination or operational test is normally less than $500. For Given the increasing costs of mitigating and water loss claims, it is often prudent and economical to pursue such an action.
EFI Global is a full-service Engineering, Fire Investigation, Environmental, Health and Safety, and specialty consulting firm. Over the last four decades, they have grown from a boutique firm to become a recognized leader in engineering failure analysis, origin and cause investigations, and environmental consulting. This expertise coupled with the extensive coverage of our 27 national offices, more than 400 professionals, and global work abroad capability allows EFI Global to deliver timely responses that consistently meets their clients' expectations.
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