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NCJ Number: 72893 Find in a Library
Title: Arson - Insurance Fraud Is a Prime Motive
Journal: Fire and Arson Investigator  Volume:30  Issue:4  Dated:(April-June 1980)  Pages:47-54
Author(s): B C Potts
Date Published: 1980
Page Count: 8
Format: Article
Language: English
Country: United States of America
Annotation: Insurance fraud in arson cases is discussed from the perspectives of the law, insurance contracts, and investigations.
Abstract: The crime of arson under common law was orginally defined as a malicious burning of a dwelling house by another person. State laws were expanded to include the malicious burning of almost any building and the destruction of buildings by their owners when the purpose is to defraud an insurance company. A new model arson law which has been suggested for State adoption includes provisions concerning aggravated arson and reckless burning or bombing and provides penalties for those fire-setters whose offenses cause death or injury. Under the terms of most insurance contracts, the crime of arson is not a basis for denying liability. Furthermore, the insurer is responsible for proving misrepresentation or fraud on the part of the insured. Insurance investigators consider the following indicators, among others, when trying to develop evidence of fraud: unemployment of the insured; delinquency in mortgage payments; adverse consumer credit informaton; property foreclosure proceedings underway; tax liens on the property; property listed for sale; marital difficulties or divorce action pending; fire during periods of renovation; recent increase of insurance; gross misrepresentation of the value of lost property; and desire to relocate from a transitional neighborhood. The most common forms of fraud and misrepresentation are the false reporting and description of how the loss occurred and the false reporting of the value of the property destroyed. One of the more common insurance-company errors in the handling of questionable cases is recognizing that the insured has filed a defective proof of loss, and then returning it to the insured with instructions to correct the defects. Defective proofs of loss which have been discovered should be treated as investigation tools rather than as settlement formalities. References are not included.
Index Term(s): Arson; Fire losses; Insurance fraud
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