Recovery
Subrogation Referral & Demand Letter Templates
Last updated 2026-08-03
Subrogation is a standing caption in every published report scheme, and it is the caption most often filled with a single word. "None apparent" is a conclusion presented as an observation. Six months later a recovery unit reads it, cannot tell whether anyone looked, and by then the failed component has gone to the landfill with the demolition debris and the party who might have paid has never heard of the claim.
The referral memo below is the internal document: it goes to a recovery unit or to counsel, and its job is to let a stranger decide within five minutes whether the file is worth pursuing. The demand letter is the outbound document that follows. They are written together because they share one spine: who, on what basis, what is preserved, what notice went out and when. Everything else is packaging.
The worked example is built on the Harbour Lane matter, where a genuine theory exists — a supply line that separated eleven months after the water heater was replaced. It deliberately does not resolve two things: whether the failure was installation or product, and how long the water ran. Both are recorded as open, because the referral is stronger when the recovery unit can see exactly where the evidence stops.
Jurisdiction
Written primarily against US first-party property practice. Claim handling is regulated state by state — acknowledgment and response deadlines, prompt-payment requirements, adjuster licensing and unfair claims practices standards all differ — and the policy actually issued governs the claim. Where a page cites a statute, model act or regulation, confirm what applies in the state where the loss occurred. Outside the US, treat the structure as transferable and the legal references as not.
Subrogation Referral template
Free Word download, no email required. Or open it in Professional Drafter — it lands in your template library, ready to draft against.
When to use this document
- Any loss where a third party installed, supplied, serviced or maintained the component that failed — which on water losses is most of them.
- Any loss where a physical component can be retained, before the mitigation contractor removes it. Preservation is the deadline that runs first, and it runs in days.
- Any file where you are about to write "none apparent" in the subrogation caption and cannot say in one sentence what you looked at.
Worked example
Fictional scenario: the Harbour Lane water loss, referred to the recovery unit on 20 July, two days after inspection, with the written referral package completed on 3 August once payment had issued. A live theory against the plumbing contractor who replaced the water heater eleven months earlier. The example leaves two things open — whether the failure is workmanship or product, and the duration of the release — because at referral neither is established.
Referral header and claim identification
- Insured:
- D. Okonjo, 118 Harbour Lane. Single-family dwelling, owner-occupied.
- Date of loss:
- reported 14 July 2026, discovered approximately 07:15.
- Peril:
- water, non-weather. Adjuster: R. Calloway. Examiner: C. Mendez.
Claim PC-2026-11482. Policy HO-4471903, term 1 March 2026 to 1 March 2027.
Referral opened 20 July 2026. This memo completed 3 August 2026, once payment had issued.
Estimate $18,340 RCV / $17,890 ACV. Paid to date $15,390, being ACV less the deductible, issued 24 July 2026. Recoverable depreciation of $450 held pending completion. Outstanding indemnity reserve $19,000, expense reserve $2,500.
Deductible $2,500, applied once. The insured has asked that it be pursued and I have confirmed it is included in the demand figure below.
Summary of loss
A braided stainless supply line serving the water heater separated at the crimped fitting on the heater end. The heater sits in a utility closet off the hallway, on slab. The insured last occupied the dwelling at approximately 18:00 on Friday 11 July and found standing water on returning at 07:15 on 14 July.
Water tracked along the hallway and living room walls, wetting drywall to 14 inches above slab along 31 linear feet of the south and west runs. Fourteen cartons of stored books on the closet floor were water-stained. The detached garage and the bedrooms were unaffected and the dwelling remained habitable throughout. Mitigation and drying were completed by the insured's contractor; reconstruction has not started as at the date of this memo.
Identified adverse party
Feldstrom Plumbing, 2214 Rennick Avenue. Contact given on the invoice as J. Feldstrom, no email listed. License number not shown on the invoice and not yet checked against the state register.
They replaced the water heater on 3 August 2025, eleven months and eleven days before the loss, under invoice 20941. The insured produced the invoice at inspection on 18 July. It records the heater model and labor and includes a line reading "conn kit" at $34, which I read as the supply lines but which is not itemized further. The line-item detail on the copy provided is partly illegible; a legible copy was requested from the insured on 18 July and again on 22 July, and is still outstanding.
The manufacturer of the braided line has not been identified. There is no legible marking on the retained sleeve. If the recovery unit wants the manufacturer named, the crimp collar may carry a stamp that would need magnification to read, and I have not disturbed the component to look.
Theory of recovery
The theory is that the supply line was fitted as part of the August 2025 heater replacement and failed at the connection made during that work.
Supporting it: the line is on the heater side, which was the work performed; the invoice includes a connector line item on the same date; the failure is at the crimped fitting rather than mid-run, which is where an installation defect would present; the fitting shows no corrosion, freeze damage or impact, and the closet is conditioned interior space with nothing stored against the heater.
Against it: eleven months of service is long enough that a fitting installed badly would ordinarily have been expected to weep earlier, and there is no reported history of weeping. The invoice does not name a line manufacturer or part number, so the connection between the retained component and this contractor rests on the insured's account and the invoice date rather than on documentary identification of the part.
A product theory is also available and I cannot presently separate the two. The distinguishing evidence would be a bench examination of the crimp — whether the collar is under- or over-crimped against the manufacturer's specification — which requires the manufacturer to be identified first. My recommendation is that this examination be conducted jointly rather than unilaterally.
One matter is not established and bears on any argument about the extent of the damage rather than its cause: the duration of the release. Last occupancy was 18:00 on 11 July, discovery 07:15 on 14 July, an interval of roughly 61 hours. There is no water sub-meter, municipal supply is billed quarterly with the next read due September, and there is no alarm or occupancy log. It is recorded as undetermined and I have not estimated it.
Evidence preserved
Retained 18 July 2026 by R. Calloway at inspection, before the mitigation contractor's demolition:
- 3. Moisture readings taken 18 July with a Delmhorst BD-2100 on the wood scale, on slab at 4, 8, 12 and 16 feet from the closet:
- 18.4%, 16.1%, 14.8%, 11.2%. Baseline in the far bedroom, approximately 40 feet from the source: 9.6%.
1. The braided stainless supply line and the separated crimped fitting, cut approximately 12 inches from the failure point at the far end, tagged PC-11482-A, bagged and photographed in situ before removal. Held in the branch evidence locker, receipt logged 20 July.
2. Photographs 3 to 9 of the component in place and after removal; 11 to 18 of the wicking line on the affected wall runs; 30 to 44 of the fourteen cartons individually; 47 in total on the file, labelled and keyed to the report.
4. Copy of Feldstrom invoice 20941 dated 3 August 2025, partly illegible.
5. Insured's account taken at inspection, unrecorded, summarized in the file note of 18 July.
The water heater itself was not damaged, was not removed, and remains connected and in service at the risk. If it is wanted for examination it will need to be secured before the insured replaces it, and nobody has asked him not to.
Destroyed before inspection: the affected drywall was not removed before my attendance, so nothing material was lost. Standing water had been extracted by the mitigation contractor on 14 July.
Notice given
No notice has issued to Feldstrom Plumbing as at the date of this memo. That is deliberate. The retained component has not been examined beyond visual inspection and photography, and my recommendation is that notice go out first so that any examination of the crimp can be conducted jointly or with the adverse party invited.
The insured has been asked not to discuss the loss with Feldstrom pending referral and has agreed. He mentioned at inspection that he had already telephoned them on 14 July to ask whether they would attend; he says he was told they no longer service that model and the call ended. That call is recorded here because it is the adverse party's first awareness of the loss and its date may matter.
Damages and supporting documents
- Indemnity paid to date:
- $15,390, dwelling coverage, issued 24 July 2026 (ACV $17,890 less the $2,500 deductible).
- Recoverable depreciation held:
- $450, releasable on completion of reconstruction.
- Insured's deductible:
- $2,500, pursued at his request.
- Unscheduled personal property:
- the fourteen cartons of books are inventoried but not yet priced. No payment has issued on contents and the demand figure below excludes them; it will require amendment once priced.
- Additional living expense:
- none claimed; the dwelling remained habitable.
Demand total: $18,340. That is the full replacement cost estimate, with the insured's deductible sitting inside it rather than added to it ($15,390 paid + $450 depreciation held + $2,500 deductible). Adjusting expense is not included pending the recovery unit's direction on whether it is pursued in this jurisdiction.
Enclosed: estimate dated 22 July; proof of payment 24 July; photograph set 1-47 with the log; moisture reading sheet; Feldstrom invoice 20941; evidence receipt for tag PC-11482-A.
Deadlines and diary
- 20 August 2026 — legible invoice copy chased from the insured, third request. Owner:
- R. Calloway.
- Evidence:
- tag PC-11482-A held indefinitely, no vendor disposal date applies. The branch locker has no automatic purge.
- Water heater at the risk:
- no hold in place. Flagged for the recovery unit — if it is wanted, the insured should be asked in writing not to replace it.
- Limitation period:
- not stated here. The applicable period turns on the theory pursued and the state, and I have asked the recovery unit to confirm and diary it rather than calculating one from the field. Confirmation requested 20 July, outstanding.
15 September 2026 — municipal water read due; will be requested from the insured, though a quarterly read spanning the loss is unlikely to isolate the release and I am not relying on it.
Recommendation and open items
Recommend referral and acceptance. The theory is supported by the physical evidence and the component is preserved and tagged, which is the part that could not have been recovered later.
- 1. Issue notice to Feldstrom Plumbing with an offer of joint examination, before any bench examination of the crimp. Owner:
- recovery unit. Requested 20 July.
- 2. Confirm and diary the applicable limitation period. Owner:
- recovery unit. Requested 20 July, outstanding.
- 3. Obtain a legible copy of invoice 20941. Owner:
- R. Calloway. Target 20 August.
- 4. Decide whether the installed water heater is wanted for examination, and if so secure it in writing with the insured. Owner:
- recovery unit. Target 14 August.
- 5. Price the contents inventory and amend the demand figure. Owner:
- R. Calloway. Target 20 August.
- 6. Identify the line manufacturer if the product theory is to be preserved. Owner:
- recovery unit, on examination. No target set.
Demand letter — body
3 August 2026
Feldstrom Plumbing
2214 Rennick Avenue
For the attention of J. Feldstrom
- Our insured:
- D. Okonjo, 118 Harbour Lane
- Our claim number:
- PC-2026-11482
- Date of loss:
- 14 July 2026
Dear Mr. Feldstrom,
We insure the property at 118 Harbour Lane under policy HO-4471903 and have paid a claim for water damage discovered there on 14 July 2026.
The damage followed the separation of a braided stainless supply line at its crimped fitting on the water heater. Our records show that your firm replaced that water heater on 3 August 2025 under your invoice 20941, and that the invoice includes a connector item dated the same day.
The supply line and fitting have been retained, tagged and photographed, and are available for your inspection or that of your insurer. No examination beyond visual inspection and photography has been carried out. We would prefer any further examination to take place jointly, and we invite you to attend or to nominate a representative.
We have paid $15,390 in indemnity to date and hold $450 in depreciation pending completion of the repairs. Our insured has paid a deductible of $2,500. The total presently claimed is $18,340. A contents element has not yet been quantified and this figure may be amended.
Enclosed are our estimate, proof of payment, the photograph log, and a copy of invoice 20941.
Please pass this letter to your liability insurer and ask them to contact the writer. We would be grateful for a reply by 3 September 2026 confirming the identity of your insurer and whether an inspection is required.
Sincerely,
R. Calloway
Adjuster, for the insurer
Direct line and reference PC-2026-11482
Section-by-section guide
What each section is for, what a good one contains, and where they typically go wrong.
1.Referral header and claim identification
The recovery unit is not in your file. Give them the identifiers they need to pull it and the numbers they need to size it, on one screen: claim and policy number, insured, loss date, loss type, adjuster and examiner, amount paid to date, amount reserved, and the deductible. The deductible belongs here because carriers routinely pursue it alongside their own outlay, and a demand that omits the insured's out-of-pocket is a demand that has to be amended. How a recovery is then shared between insurer and insured, if it comes in short, turns on state law and is not a field decision: record the figure and let the recovery unit apply it.
2.Summary of loss
Four or five sentences of fact, in sequence, with no argument in them. What failed, where, when it was discovered, and what it damaged. Keep the recovery narrative separate from the coverage narrative. A recovery file that inherits your coverage reasoning inherits its weaknesses too, and the adverse party's insurer will read this document.
3.Identified adverse party
Name, address, the relationship to the loss, and how you identified them. Include the document that ties them to the component: an invoice, a permit, a work order, a service sticker on the equipment. If you could not identify a party, say who you asked and what you were told. "Unknown installer" with three named inquiries in it is a live file; "unknown installer" alone is a closed one.
4.Theory of recovery
This is the section that justifies the referral, and it is the one that gets skipped. State the theory in a sentence, then the facts that support it, then the facts that cut against it. Where more than one theory is available — the installer's workmanship and the manufacturer's product, for instance — say which is stronger and why, and say plainly if the evidence does not yet separate them. Describe the factual basis; leave legal characterization to the recovery unit or counsel, whose job it is.
5.Evidence preserved
Itemize it: what was retained, when, by whom, where it is now, and how it is identified. Photographs, the tag number on the component, the storage location, the moisture readings, the statements taken. Preservation is the step that cannot be repeated. Note also what was destroyed before you arrived and on whose instruction, because the adverse party will ask.
6.Notice given
Who was notified, on what date, by what method, and what the notice asked for. Notice that invites the adverse party to inspect jointly before the component is examined further is worth more than notice sent afterwards, because a joint inspection is difficult to attack later. If no notice has gone out yet, say so and say why. A deliberate hold pending referral is a decision; silence is not.
7.Damages and supporting documents
The claim payments to date, itemized by coverage, plus the insured's deductible and any expense you intend to include. Attach the estimate, the invoices and the proofs of payment rather than summarizing them, and reconcile the total to the figures in the header so nobody has to. Where recoverable depreciation is still held, say so, because the demand figure will change when it releases.
8.Deadlines and diary
Any date that ends something: an inspection scheduled, a joint examination, a storage disposal date at the vendor, a response date set in the notice. Limitations periods differ by state and by theory, and they are not the field adjuster's call. Record the date the recovery unit or counsel confirmed the applicable period rather than calculating one yourself. A wrong date recorded confidently is worse than a blank one flagged for confirmation.
9.Recommendation and open items
What you are asking for: refer, hold, or decline, and what you need from the recovery unit to move. Each open item gets an owner and a target date. This section is what turns the memo from a report into a handoff.
10.Demand letter — body
The outbound document. It states the loss, the basis on which the recipient is asked to respond, the amount, the supporting documents enclosed, and a date by which a reply is requested. Keep it factual and short. Do not characterize the recipient's conduct, do not quantify anything you cannot evidence, and do not assert a legal conclusion. The enclosures do the work and the sentence you improvise is the one that gets quoted back. Address it to the party and copy their insurer if known.
Common mistakes
The failure modes that show up most often when this document is reviewed later.
Writing "none apparent" without saying what was considered.
It reads as a finding and it is not one. Nobody downstream can tell whether an installer was ruled out or never looked for, so the file gets reopened at exactly the point when the component has been thrown away and the answer is unrecoverable.
Letting the mitigation contractor take the failed component with the debris.
Preservation runs on the shortest clock on the file, usually a day or two, and it is the only step that cannot be repeated. A referral with a strong theory and no component is a referral the recovery unit declines.
Examining or dismantling the retained part before notice goes out.
A unilateral examination of the one item that matters gives the adverse party a procedural complaint that has nothing to do with the merits. Notice first, then a joint examination, costs a couple of weeks and removes the argument.
Copying the coverage analysis into the referral.
The demand and its enclosures end up with the adverse party's insurer. Reasoning written to weigh an exclusion against your own insured is not reasoning you want quoted in a recovery negotiation, and it was never needed there.
Omitting the insured's deductible from the demand figure.
Carriers routinely pursue it alongside their own outlay and the insured expects it to be asked for. Leaving it out means either amending the demand later or explaining to the insured why his $2,500 was never claimed. How a short recovery is split between the two of you varies by state; what happens in the field is only whether the figure is on the demand at all.
Calculating a limitations date from the field and recording it as fact.
The period turns on the theory and the state, and a confidently wrong date is relied on precisely because it looks authoritative. Flagging it for confirmation by the recovery unit takes one line and shifts it to the person whose call it is.
Questions
- What actually has to be in a subrogation referral for it to be accepted?
- Four things, and the rest is packaging: a named party with the document that ties them to the loss, a theory stated with the facts both for and against it, an itemized list of what is preserved and where it is, and the payment figures reconciled. A referral missing the preserved-evidence list is the one that gets returned, because the recovery unit cannot rebuild it.
- Should the field adjuster send the demand letter, or the recovery unit?
- Follow your carrier's protocol — practice varies, and some files go straight to counsel. What matters more than who signs it is sequence: notice and an offer of joint inspection before the retained component is examined further. If you are holding notice pending referral, write that down as a decision rather than leaving the file silent.
- Do the models say anything about subrogation documentation?
- Not directly. The nearest thing is the claim-file standard in Model 910 §6, which asks that a file be maintained so as to show clearly the inception, handling and disposition of each claim, and be sufficiently clear and specific that events and their dates can be reconstructed. A subrogation caption reading "none apparent" does not let anyone reconstruct anything, which is the practical objection to it as well as the documentary one.
- Where does the policy itself address recovery rights?
- In the standard fire policy enacted by statute in several states, the wording is that the company "may require from the insured an assignment of all right of recovery against any party for loss to the extent that payment therefor is made by this Company". Modern homeowners forms are proprietary and word it differently, so read the form on your file rather than assuming. The statutory text is linked below because it is public and permanently citable.
The blank template
Exactly what is in the Word download, so you can see the structure before deciding whether you want it.
Referral header and claim identification
Summary of loss
Identified adverse party
Theory of recovery
Evidence preserved
- Physical components retained, tagged and photographed
- Photograph set and numbering
- Measurements, readings and the instrument used
- Statements and documents obtained from the insured
- Anything discarded before inspection, and on whose instruction
Notice given
Damages and supporting documents
Deadlines and diary
Recommendation and open items
Demand letter — body
Download this template
Free Word download, no email required. Or open it in Professional Drafter — it lands in your template library, ready to draft against.
Sources
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This page is a documentation aid, not legal advice and not a coverage opinion. Claim-handling requirements vary by state and by policy wording, and a template cannot tell you what your file requires. The worked example describes a fictional loss.