Subrogation should be considered immediately, even after a catastrophe loss. This was the takeaway during a recent webinar presented by national law firm Cozen O’Conner.
Thaddeus Baria, an Chicago-based associate in the firm’s Subrogation and Recovery Practice Group, explained that a catastrophe loss can be defined as being caused by a severe event, resulting in a significant amount of damage and affecting a wide range and number of people.
Some examples of catastrophe losses include earthquakes, tornadoes, hurricanes, hail, terrorism, fires and winter storms.
Subrogation is often the last thing people think about after a catastrophe loss, said Baria. One reason is that the loss may be considered an Act of God. Since states look at what constitutes an Act of God differently, he said it is important to review each state and catastrophe individually. For example, in Iowa, a loss is considered an Act of God only when it is the sole proximate cause of harm in question. According to the Chicago-based attorney this “opens up subrogation action against a human actor.”
Florida, too, allows for other contributing causes to be actionable and pursued in subrogation, he said. On the other hand, in Mississippi, if an Act of God is a substantial factor in causing damage, then any other potential party won’t be held legally responsible. According to Baria, pursuit of recovery involving a cat loss in Mississippi, is “a pretty high hurdle to overcome.”
Baria explained that hurricanes will result in wind and water claims for the most part. As a result, they can be considered both a result of structural and Act of God causes. He recommended reviewing local building codes and building practices with two questions in mind:
- “Was the structure designed properly?”
- “Did it meet building codes?”
Despite the opportunity for recovery resulting from structural deficiencies, there are several defenses, he said. These include the economic loss doctrine as well as contractual waivers.
Peter Rossi, a member located in the firm’s Philadelphia office, has handled a lot of property damage cases resulting from floods.
“Floods are the leading cause of damage in the insurance industry,” said Rossi.
He explained the rise in flood claims is due to many reasons, including global warming and a greater utilization of flood plains, typically because the land is less expensive to develop.
With floods, Rossi said that focus should be on whether there was any government action relating to the flooded area and analysis of the design and construction of the area.
Potential targets include governmental entities, engineers, contractors, adjacent landowners and developers. Potential theories of liability, according to Rossi, include lack of stream or watershed maintenance, improper land development or dam release and stream obstructions.
Much information is available from government and public entities, he said. These include rate maps and rainfall data. Flood insurance rate maps are a “source of tremendous information,” he added. Flood insurance studies are a good source of information since they show flood zones. The Army Corps of Engineers is another good source of data, since they are involved in every water project in the U.S.
Rossi added that “YouTube videos are a fertile area to gather information on floods.” He recommended searching the flood date and location in an internet browser and reviewing the results.
“We’ve developed significant recovery on cases based on videos found on the internet,” he added.
It’s a good idea to identify other parties with a similar recovery interest, he said. In addition, a successful flood subrogation case will need an expert, such as a hydrologist to interpret data.
“You absolutely need an expert to prosecute a flood case,” Rossi emphasized.
Because these cases can be expensive to litigate, he recommended reviewing notice requirements and tort damage caps. While, governmental entities are immune from damages resulting from discretionary acts, immunity doesn’t typically apply to contracts, such as easements.