Subrogation remains one of the most complex and nuanced areas—especially when novel claims and governmental immunity enter the picture. That’s why our recent Ask a Pro webinar, The Subro Scoop Part II: How to Navigate Securing Recovery on Novel Claims in Subrogation, was a timely and insightful session for claims professionals and insurance carriers.
Hosted by Shareholder Tiffani Palmer, the webinar featured expert insights from Shareholder and Subrogation Group Chair Ted Traut and Attorneys Michael Chapman and Thomas (Tom) Duquette. Here are their top 7 takeaways from the session!
1. Understanding out-of-pocket recovery
The session kicked off with a critical question: As an insurance carrier, can you recover out-of-pocket damages for your insured?
To answer this question, it’s important to clarify the difference between deductibles and uninsured losses. While most states allow recovery of deductibles—even without the insured being a named party—pursuing uninsured losses can introduce documentation challenges and potential conflicts of interest. In Ohio, the process of collecting someone’s out-of-pocket deductible requires the individual to be named as a party in the action.
According to Michael, this issue is difficult due to how different states interpret the Unfair Claims Settlement Practices Act, which obligates insurers to attempt recovery of deductibles and reimburse insureds proportionally. However, courts often prohibit carriers from recovering on behalf of others unless proper assignments or legal standing are established.
2. Governmental immunity: Navigating legal exceptions
Another subrogation issue that often arises is governmental tort immunity. The panel dissected the layers of sovereign immunity across federal, state, and local levels. Ted explained that federal claims fall under the
Federal Tort Claims Act, which requires the submission of an Standard Form (SF) 95 within two years of loss. In Ohio,
Revised Code statute 2744.05(B) bars subrogation claims against state entities and political subdivisions.
According to Michael, every state has tort acts that serve as waivers of sovereign immunity. The statutes are different and very limited. With that said, insurance carriers should provide proper and timely notice, especially when multiple parties are involved. Identifying the correct agency—whether a park district or transit authority—is crucial, as missteps can result in statutory bars.
Tom shared how Michigan handles government immunity under the
Michigan Governmental Tort Immunity Act. It shields governmental agencies and their agents from liability unless they act outside their scope of employment or engage in gross negligence. Real-world examples, such as off-duty officers or park rangers in patrol cars, illustrate how varied these determinations can be.
3. Subrogation in trucking claims
Trucking claims present their own set of hurdles. Cargo loss claims are governed by the
Carmack Amendment, which limits the liabilities of shipping companies for the loss or damage of goods in interstate commerce. Despite limited defenses, exceptions exist for household goods, live animals, perishables, such as vegetables or other crops, and hazardous materials.
Ted discussed the difficulty of identifying the owner of the truck or truck entity/company, especially if multiple carriers are involved. He stressed the importance of obtaining motor carrier numbers and leveraging federal databases to track statutory agents.
Tiffani added that commercial drivers are subject to federal safety regulations, including mandatory drug and alcohol testing. These records, along with dashcam footage and electronic data logs, can be pivotal in establishing liability.
4. Vehicle ownership and liability
Ownership disputes can derail subrogation efforts, particularly when vehicles are sold shortly before a loss. Tom explained that Michigan’s concept of constructive ownership, where use and possession of a vehicle—regardless of title—can establish liability.
Michigan’s
owner liability statute, under
Civil Liberty Act, MCL 257.401, allows carriers to sue both the operator and the owner without proving negligent entrustment. If Personal Injury Protection (PIP) benefits were paid, the owner of an uninsured vehicle can be sued even if the insured was at fault.
In contrast, Ted said that the state of Ohio requires proof of negligent entrustment or agency relationships to hold owners liable. Michael added that Kentucky’s title-based system makes registered owners responsible, though exceptions exist for dealers and grace periods.
5. Determining a claim’s strengths and weaknesses
When evaluating a subrogation claim, the panel advised taking a four-pronged approach:
- Liability – Are there credible witnesses, physical evidence, or police reports?
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Damages – Are the damages well-documented and reasonable?
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Collectability – Is there insurance coverage or garnishable wages?
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Cost – Will expert testimony or depositions outweigh potential recovery?
Tiffani emphasized the importance of early attorney involvement to assess these factors and avoid surprises during litigation.
6. What keeps subrogation attorneys up at night?
The panel closed with a candid discussion of their biggest worries or fears related to subrogation. Here’s a quick recap of what the team shared:
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Statutes of limitation – Missing deadlines due to late referrals
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Unpredictable witnesses – Insureds changing stories or failing to appear
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Incomplete records – Missing documentation that could make or break a case
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Trial risks – Even the strongest cases can unravel due to unexpected testimony or lack of preparation
7. Final Takeaway: Talk to an attorney early in the process
The key message from our team: Don’t sleep on subrogation claims. You should engage your subrogation attorney(s) early to assess novel claims, navigate governmental immunity and avoid costly litigation pitfalls. Our team is ready to help clients evaluate their files, provide strategic advice and maximize recovery.
This blog is not a solicitation for business, and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.
