If a fire occurred due to a neighbor, developer, or someone else’s negligence, there are some key steps you need to take in addition to filing a claim with your insurance company. Firstly, obtain the fire inspection report which confirms the party is at fault. Submit it to your insurance company who will still follow their standard process for assessing and paying out your claim. However, some key differences may arise due to the potential for subrogation (where your insurer seeks reimbursement from the builder’s insurer).
1. Will Your Insurance Company Overestimate or Undervalue the Claim?
✅ Insurance companies do NOT typically overestimate claims, even if they plan to recover the money from another party.
✅ They still try to minimize payouts, because:
- They don’t want to overpay and set a precedent for larger settlements.
- Subrogation isn’t guaranteed; if they can’t recover the funds, they bear the cost.
- Insurance companies prioritize fast settlements over prolonged legal battles.
💡 What This Means for You:
- Your insurer will likely treat the claim like any other fire loss, aiming to close it quickly rather than inflating the amount.
- They will offer a payout based on their own adjuster’s estimate, which may not reflect the true cost of rebuilding.
- This is why it’s important to have a trusted contractor (free) or public adjuster (free) review the estimate to ensure you’re getting enough to fully restore your home.
2. Do Insurance Companies Like or Dislike Subrogation?
✅ Subrogation is a common practice, but insurers don’t necessarily “enjoy” it because:
- It requires legal effort, documentation, and negotiation with another insurer.
- The at-fault party’s insurer may dispute or delay payment, leading to drawn-out legal battles.
- Even if they win, the recovery process can take months or years.
🚨 However, insurance companies still pursue subrogation aggressively when:
- The at-fault party is clearly liable (supported by the fire report).
- The damage is large enough to justify legal costs.
- They believe the at-fault party’s insurance policy has sufficient limits to cover the claim.
3. Should You Rely on Subrogation or Take Legal Action Separately?
- If your insurance fully covers your loss, let them handle subrogation—it saves you the hassle.
- If your payout is insufficient (e.g., it doesn’t cover full rebuilding costs), you may need to sue the developer separately to recover additional damages.
- If you suffered extra losses (business interruption, personal injury, lost rental income), subrogation won’t recover those—you’d need to pursue your own lawsuit.
💡 Your Best Strategy:
✔ Let your insurer handle the immediate payout so you can rebuild ASAP.
✔ Have a public adjuster or lawyer review the payout to ensure you get the full amount needed.
✔ Monitor the subrogation process—if your insurer doesn’t pursue it aggressively, consider legal action against the builder yourself.