A Video Explaining Why Arson is a Named Peril

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Arson is a Covered Peril

Because arson is a fire, it is not an excluded peril in any first party property policy of insurance. An arson is never a defense to an insurance claim alone. Only when arson is caused by the named insured, or any insured is involved in causing the fire to occur for the purpose of defrauding an insurer. In Eddie P. Bates v. Hartford Insurance Company of the Midwest, No. 09-12840 (E.D.Mich. 03/03/2011) the insurer attempted to deny coverage by claiming that the fire was a “vandalism.” Since the house was vacant for more than 30 days there was no coverage available under the policy. The insurer’s effort to avoid payment was defeated because the insurer named vandalism and fire as separate perils, but did not, as it did for vandalism, exclude “fire” after the dwelling was vacant for more than 30 days.

As a result, the United States District Court Eastern District of Michigan Southern Division found that Plaintiff, Eddie Bates was correct when he alleged that the Defendant, the Hartford Insurance Company of the Midwest breached the parties’ insurance contract when it wrongfully denied his requests for payment under his fire insurance policy.

Bates  owns a residential rental property in Detroit, Michigan that was damaged by a fire on June 17, 2008. Bates asserts that he did not learn about the fire loss until his return to the United States from a vacation on June 23, 2008. He reported the fire loss to Hartford on the following day.  Upon its receipt of this claim, Hartford sought a copy of the police report from the Detroit Police Department. Hartford claimed that the Bates house was vacant in the days which immediately preceded the fire putting into issue an exclusion.

This case teaches that when asserting a policy defense, it is imperative that the insurer read the words of the policy and not read words into the policy that are not there.  Although a vandal may, as part of his vandalism, cause a fire, the efficient proximate cause of the loss was fire. If the insurer wished to avoid losses by fire started by a vandal, it would be easy to write that exclusion into its policy.

Video is also available at https://youtu.be/0e88OTplUWk



© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as a

n insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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