When residential and property losses occur – whether it’s a result of fire, water damage, appliance and equipment component failures, or other hazards – insurers utilize forensic experts to investigate claims. These experts determine the causes and origins of losses, the extent of the damage and the appropriate action to take for resolution. Based on the findings by the claims forensics team, the insurer will determine if the coverage in place will respond and, when possible, if subrogation is an option.
We spoke to Lyle Donan, Executive Chairman, Alpine Intel, which provides a number of claims investigative and forensic services for property losses to leading personal lines and commercial lines carriers. Alpine Intel has a long history, with its origins dating back to 1947 when Lyle’s grandfather founded a company to provide geology and exploratory work for the growing mining industry in Indiana and Kentucky. During the last eight decades, the company has expanded and today delivers actionable intelligence for property losses. Located in Charlotte and Louisville, Alpine has 515 employees.
In providing the various claims forensic services to insurance carriers, Lyle explains that all documented reports are unbiased. “There’s a clear separation of church and state in what we do. We never see the policy or policy language, nor do we determine whether coverage will apply. Also, our compensation is not attached to the outcomes we deliver. This is critical for our carrier clients and the regulators and governing bodies that oversee our industry and control the licenses our employees and business are required to hold to perform the work we do.”
Following a residential or commercial property loss, forensic engineering is required to pinpoint the cause of loss. Under the Donan Engineering brand, Lyle expects to conduct more than 30,000 loss investigations for 2022 across the United States. “While we investigate all types of property, volumes of losses we investigate are greater on the residential side, as there are many more residential properties. In addition, commercial properties tend to be better constructed and maintained and experience fewer losses,” explains Lyle.
The professionals at Donan Engineering include civil, structural, mechanical, electrical, and geotechnical engineers and roofing consultants who apply scientific methods and leverage technology to deliver sound and unbiased conclusions regarding the cause and origin of a loss. They asses how the damage occurred, how bad the damage is, if pre-existing damage existed that’s not attributable to the peril, whether there are building code considerations, and how to best repair the damage.
Certified investigators adhere to NFPA guidelines and standards to perform origin and cause investigations following a fire loss. In addition to investigating residential and commercial property fire losses, Lyle explains they also investigate a large number of vehicle and equipment fire losses that occur on the road. “As we see the number of hybrids and electrical vehicles on the road rise, we are also seeing the number of fire losses increasing.”
Alpine Intel conducts tens of thousands of HVAC investigations on residential and commercial property each year. These types of claims investigations are primarily driven by lightning and power surges, with hail also creating an exposure for HVAC damage. An investigation is performed to determine the peril that caused the damage and the appropriate repair solution for the damaged equipment.
Under the brand StrikeCheck, Alpine Intel conducts investigations focusing on damage to electronically powered equipment as a result of lightning and power surges. On the residential side, technicians will evaluate the cause of loss to equipment which includes appliances, consumer electronics, smart technology, well pumps, and solar panels. On the commercial side, they will investigate losses to office equipment, security systems, generators, solar panels, and more. They will provide an accurate cause of loss and scope of the damage with fact-based repair and replacement solutions.
Component Testing Laboratory
Licensed professional engineers at the Donan Component Testing Laboratory conduct product failure assessments of appliances (water heaters, dryers, etc.) and plumbing components such as supply lines. “Think of this service as the Consumer Reports for property insurance claims (such as water damage) caused by failed appliances and components. Investigations are performed to identify failure mode and evaluation for potential subrogation,” says Lyle.
When an insurance carrier, for example, pays a claim for interior water or fire damage and the origin and cause resulted from a failed appliance or plumbing component, there is an opportunity to consider subrogation against the manufacturer. The insurer is able to reduce its indemnity if they recover the claim. In addition, many carriers return the deductible to their insured, and the party responsible for the claim is held accountable for the damage.
Evidence is required for accurate forensics to take place in claims involving equipment losses. Capturing, packaging, shipping, and building data integrity around property claim evidence is both a skill and risk for the property insurance claims industry. To mitigate these risks and build confidence around claims evidence, Alpine Intel operates a business known as Loss Logistics, whose sole function is evidence retrieval, transportation for evaluation, storage, and evidence data integrity. Without these things done properly, there’s little hope in a positive subrogation outcome.
“For example, a common source of water damage in properties is the water heater,” explains Lyle. “All water heaters eventually leak; the variables are the timing of the leak and the extent of the damage the leak will cause. If it’s a fairly new water heater, perhaps five years old, and it leaks and causes significant property damage, you have a strong subrogation claim.”