Primary policy: Homeowners

Secondary policy: None

Items in question: entire claim

Supposed cause of loss/fraud: fire

Suspicious indicators: presence of accelerants,

Actual cause of loss: arson

Summary

A fire occurred at the residence premises and the insureds filed a claim. Upon investigation the fire investigator determined that arson was the cause of loss.

Facts

The fire occurred October 31, 2009. Upon responding to the fire the fire department discovered the door locked and secured, and forced entry into the home.

The fire investigator discovered that a one by three foot hole was cut into the floor of the living room, which was part of the HVAC system. The hole smelled of petroleum based substance and the investigator saw several empty containers in the home that also smelled of petroleum based substance. A spout was found going from a container to the hole in the living room floor. There was an overwhelmingly strong odor in the first floor living and dining rooms. The investigator determined the cause of loss was incendiary by person or persons unknown.

The gas and electric had been turned off at the home in April 2009. The insured's stated that the gas was put in the wife's name and reconnected, and was on at the time of the fire. The power company states that the gas and electric were never reconnected and had never been in anyone other than the husband's name.

An investigator from the insurance carrier detected an odor similar to gasoline in separate rooms of the home and determined that the fire originated in multiple areas of the home, including the second floor stairway, a second floor foyer, the master bedroom, and the northeast corner bedroom. The investigator determined that the cause of the loss was the ignition of gasoline in the various areas of the home.

On the night of the fire the insureds stated that they had gone to visit their adult daughter at 6 p.m. and that the daughter was at home. The daughter stated that she was not home until 9:30 p.m. and that her parents were there when she arrived. Mr. Insured stated that they packed overnight bags and that the youngest daughter did not have a costume while Mrs. Insured said they did not pack bags and the youngest had a pumpkin costume. Through the course of the investigation the insureds

gave conflicting stores on whether or not they were alone in the house, when they left for their daughter's, what they did after leaving the home, when they arrived at the daughter's and if she was there on arrival, and whether or not they had keys to the daughters apartment. They also stated they has gas service at the time of the fire which the utility company indicates is incorrect and they stated they were current on water and gas bills but had a balance due on both. The carrier denied the claim for a number of reasons, one being that the insureds either caused or encouraged the fire to be ignited. The insureds alleged breach of contract and bad faith.

Final Result

The record unequivocally showed that the insureds gave different accounts of evidence that was pertinent to Allstate's coverage determination; the court found that the insureds misrepresented facts essential to their claim and violated their duties under the insurance contract; therefore the carrier was not obligated to provide coverage. The court found that the insureds did not fulfill their obligations under the insurance contract and that Allstate acted in good faith. Based on the foregoing, the Motion for Summary Judgment filed by Allstate Property and Casualty Insurance Company, on April 2, 2012, is GRANTED. The Motion for Partial Summary Judgment [filed by the insureds on April 2, 2012, is DENIED; and the Motion to Strike filed by the carrier on May 4, 2012, is GRANTED.

Practical tips/fraud indicators: Per the court, when determining whether to deny a claim on the grounds that the insured committed arson, insurance companies generally look at whether the fire was incendiary in nature, the financial viability of the insured, the whereabouts of the insured at the time of the fire, whether the premises were secured, and who had access to the premises.

This insured had financial difficulties, told conflicting stories about their whereabouts, and there was evidence that the fire was incendiary. This case fist most of the indicators when looking at a case for possible arson and fraud.