Are House Fires Investigated for Fraud?

Financial hardship is generally why a person would engage in arson-related fraud. He or she may feel that the money problems are too much and may need to light his or her house on fire. If the mortgage is a larger concern, the homeowner may determine that the fire could release all his or her issues with an insurance settlement. What the person may not know is that the insurance company or local authorities may flag the person as a possible risk of insurance fraud and intentional arson. If the person is able to hire an experienced lawyer to defend him or her or even to seek a settlement with the insurance company, he or she may avoid conviction and acquire the monies from the carrier.

The Red Flags

When the insurance carrier believes the person in the insurance claim may commit fraud, there are certain red flags that the agency or agent will look for in these situations. This helps the company determine if the fire was an accident or an intentional act. Some red flags exist in phone records or financial documentation. Others are the looking up of credit reports and erratic behavior before the fire. The person may purchase certain materials or odd items that he or she would not normally buy. He or she may even contact a lawyer, fire specialist or someone that could give details about how to avoid burns or how fires work.

The Levels of Proof

The local law enforcement may apply different levels of proof than an insurance agency for investigations into house fires. The police may only look for signs that the incident was illegal or intentionally created by the owner of the house or someone that started the fire in the home. However, the insurance agency is looking for issues that relate to insurance fraud and a way to back out of paying the policyholder monetary benefits to cover the costs of the insurance coverage. Some of these incidents lead to litigation, property damage claims and criminal investigations based on the levels of proof found by either party.

The Arson Defense

Part of the problem in proving that the homeowner, policyholder or someone related to this person caused the fire is the proof necessary which may lead to the arson defense. There are three elements of a case that could lead to either the policyholder losing due to a valid fraud claim for the fire or the insurance carrier paying out to the individual. These generally include whether the person has any motive or not, the opportunity to take advantage of the insurance coverage and the actual fire itself. The proof surrounding these elements may launch an investigation by both police and insurance company.

The Insurance Investigation

While there is a distinct necessity to gather material evidence by law enforcement, the insurance carrier may deny coverage based on other inferences or circumstantial evidence. The agent assigned to investigate the matter may explain to the company that the owner had a material representation in the matter. This standard, if established, requires an intentional or knowing misrepresentation in the claim. If this is material to the coverage of the house fire, the company could deny the claim. The carrier could refrain from paying out monetary compensation even if there is no proof that the homeowner or another person set the fire.