A woman woke in the middle of the night to her home on fire. She escapes unharmed but the house is lost. Later, an investigation discovers her husband is the arsonist. She and her husband are the homeowners but plan to divorce with her staying in the home. They had home insurance so she put in a claim. But with her husband intentionally setting the house on fire, is their coverage still valid? With her being the innocent party, will the insurance company pay the claim? This happened in California, but in this state and a growing list of others, the answer is yes.
In the past, innocent spouses got nothing for a jointly owned home because of the wording in a policy. Coverage was denied due to the actions of the co-insured. This was most likely done to keep the guilty party from benefiting. But now, decisions in court are making it easier for the innocent party in a fire to still have coverage in their homeowners’ policy.
Arson is a big deal. The United States Fire Administration in 2010 (newer information is not yet available) recorded 16,200 acts of residential arson that resulted in 260 deaths, 750 injured persons and damage totaling almost $500 million. Today, approximately 10% of fires are intentional with an average monetary loss for arson of any type is $17,289.
To actually prove an insured committed arson can be tough. Arsonists tend to work alone so there are no witnesses. Circumstantial evidence such as strong motive, debt, no job, divorce, and tax liens are often used as proof. Sometimes, one of the insureds is just trying to finagle a remodeled home.
If an expert on fire can show the fire was started on purpose and that motive exists, attention shifts to finding out where the insured was when the fire occurred. Cell phone records, credit card purchases and whether or not it looks like there was a forced entry are some of the things that can aid an investigation. But, unfortunately, the insured’s location may not tell all as they could have hired somebody to do it for them.
Should arson be proven with enough evidence pointing at a named insured, insurance companies will most likely deny the guilty party any coverage. Arson is highly frowned upon and is often prescribed by a state insurance code even if the insurance policy doesn’t mention it specifically.
Generally, insurance policies have not allowed for acts carried out on purpose by “the” insured, but courts have ruled that the innocent party is allowed coverage with exclusions applying only to the guilty party. But, there are policies that will not cover intentional acts that are pulled off by “any” insured or “an” insured. With that wording courts have decided that not even the innocent party is covered. Because of this, insurance companies have changed to excluding coverage to “any” insured for acts committed on purpose.
In arson claims, it’s very important to have a thorough investigation to determine the actions of each insured and if they took part. At times, the “innocent” party may in fact be guilty if they committed fraud or withheld information. If one insured is proven as being guilty then it would be a good idea to find out what your jurisdiction has ruled in regards to if the innocent insured has coverage and how much money they can get from the insurance company as well as to assess what interests your mortgage company may have in the loss.
Arson is no laughing matter and you should find out what your options are, if any. It is important to know what the wording of your policy is and how much protection you do or do not have if your home is burned down accidentally or on purpose. For any questions you may have, feel free to give us a call at 305-270-2100.
At Filer Insurance, Inc., we have been serving Miami and South Florida since 1919. We specialize in miami home insurance as well as miami auto insurance, miami life insurance and miami business insurance. Please give us a call or come by our office for a free miami home insurance quote.