When an insured suffers a large loss, fast and competent investigation is fundamental to understanding the incident and assigning liability for its occurrence. Without a well conducted loss investigation, the chance for subrogation and successful recovery from liable parties is highly improbable.

A well conducted loss investigation has five key elements :

• Early, on-scene investigation
• Document and preserve the evidence
• Establish a theory for cause of the loss
• Identify responsible parties
• An expert report that presents a strong, logical connection between the loss theory and the evidence

Each element is important and critical in the successful completion of a loss investigation.

Early, on-scene investigation is vitally important to protecting your interests and the ability to subrogate the claim. Regardless of the type of loss (fire, explosion, industrial accident, construction site, etc.) the loss scene is very dynamic changing from minute to minute. Photo and / or video documentation is a must and as long as the scene is developing, such documentation needs to keep occurring. Witnesses to the occurrence will often leave the scene as soon as they feel that they can't contribute. A good loss investigation team will identify witnesses quickly, acquiring their contact information and requesting an immediate written statement. It's important to prevent witnesses from discussing the incident before their statement is written as cross-communication will undoubtedly occur. Follow-up interviews with certain key witnesses are typically conducted but this is dependent on acquiring their contact information at the scene of the loss. For the above reasons and many more, it is vital to get investigators to the scene as fast as reasonably possible.

In addition to the photo / video documentation of the incident scene, documentation of the evidence is equally important. Care must be taken to preserve the evidence and minimize its movement or alteration. If possible, have a subject matter expert(s) examine the evidence in-situ as additional factors relating to cause may only be evident when viewed as a whole. The evidence must be preserved in the best way possible. The subject matter expert should provide valuable insight on this matter. If the evidence cannot be left in-situ, it should be stored in a secure location that limits access by unauthorized parties. Regardless of where and how the evidence is stored, it is imperative to avoid spoliation.

Establishing a theory for the cause of the loss can be a challenging task. Representatives of the insured, the on-site investigations, the subject matter experts and other knowledgeable parties should be brought together to review the incident documentation, witness statements, evidence and develop a clear cause and effect relationship which describes the incident. This theory requires careful study and testing. The evidence must eventually be made available to the opposing parties so it must clearly support the cause of loss theory put forth.

Once the theory of loss is established, identification of responsible parties is typically straight forward. It may be useful to perform testing on exemplar items to prove liability in the loss. When conducted, such testing must be very well thought out, planned, executed and documented. Too often unexpected results are obtained or the testing is conducted in a questionable manner that invalidates the results.

An expert report should be generated but at this stage it does not have to be compliant to Federal Rule 26. However, it should include the credentials of the authors to establish their credibility and must present a clear and logical examination of cause and effect referencing evidence to explain liability in the loss. The expert report should be considered fundamental to successfully subrogating a large loss.

Minimizing the impact of a large loss claim can be achieved through subrogation. Subrogation requires a very thorough and carefully conducted investigation with emphasis on evidence preservation including photo/video documentation, witness statements and follow-up interviews.

For more information, call 317-536-7000, or email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .