What is subrogation?
AN EXAMPLE:
While installing a cabinet, a contractor hits a sprinkler line in the building that causes water damage. The insurer of the building, on behalf of the strata corporation, can seek compensation from the contractor, otherwise known as "subrogating against" the contractor.
Subrogation enables recovery of damages from the third party that is at-fault.
What to do immediately after a loss:
- Identify and preserve the physical evidence.
- Do not allow parts or evidence to be taken by the at fault party or their representatives.
- Take as many photographs and videos as possible showing the physical evidence and damage, as well as the cause of loss.
- Have any plumbers provide proper, detailed written reports on the exact cause of loss.
- In some cases, such as fire scenes, it is recommended to have experts on scene immediately to examine the undisturbed evidence.
Why is it so difficult and why does it take so long?
- Subrogation fails when allegations of negligence are not substantiated by facts. Evidence is required to establish fault.
- It is very hard for the strata to subrogate in situations where an uninsured third party causes damage (i.e. a ‘friend’ who installed a toilet). Always use licensed, bonded and insured trades to work in the building.
- It is very important for the strata to obtain certificates of insurance from third parties adding the strata as an Additional Insured prior to any work commencing.
- As per the Property Strata Act, the strata cannot subrogate against at-fault unit owners or tenants as they are also considered Named Insureds under the strata's insurance policy.
- Keep track and document emergency and repair costs. With large losses, it is recommended that you seek out multiple bids for the emergency and repair work as damages and expenses will no doubt be in dispute.
What you can do to assist with a subrogation claim:
While your property adjuster will be there to help guide you through the entire claims process, they were not there when the loss occurred. Take photographs prior to anything being removed, secured or cleaned up. If you can, get contact information from the at-fault party and their insurance information if available.
