The recent wildfires in California are racking up staggering losses for insurers, and are expected to rise above 3.3 billion dollars. The accumulated damages represent claims from thousands of homes that were lost or partially damaged, as well as those from thousands of destroyed cars. As the fires come under control, early investigations looking for the cause of the blaze are focusing on the possibility that high winds downed trees into power lines owned by the Pacific Gas and Electric company (PG&E). In order to prove that PG&E was to blame in the fires, however, investigators will have to uncover evidence, and this evidence may have been destroyed in the fire. This is a concern that investigators face not just when dealing with massive fires like the ones in Sonoma and Napa, but also when dealing with individual claims for fires that destroy or damage homes or businesses.
What do investigators look for?
In smaller fires of this sort, there is always the possibility that arson is to blame. But in order for an insurer to deny a fire claim on the basis of arson, investigators have to fires prove that arson was the likely cause. Two of the signs investigators look for are:
- Signs of gasoline or other accelerants
- Specific burn patterns, including extreme charring or burn holes on the floor
If investigators find evidence of gas or other fire-starting materials, this is considered to be harder evidence of arson than burn patterns alone.
Lack of cooperation can trigger denial
Even if an investigation yields no to little evidence of arson, an insured's claim can still be denied if he or she refuses to cooperate during the examination under oath (EUO). Evidence of financial distress, including recent foreclosure, job loss, poor credit or late payments can also accumulate as evidence against an insured's claim.
Don't pay for false claims
With the devastation laid bare in California, it's hard not to be sympathetic with fire victims who have lost everything, and depend on insurance claims to start rebuilding their lives. That doesn't mean that every fire claim is legitimate -- insurers still need to protect themselves against false claims resulting from fires that people intentionally set.