Chapter 7 - Property Claims

Question 1

Define arson

Answer 1

An actual or attempted malicious and deliberate burning of physical property by its owner or another person

Question 2

What should a fire scene adjuster ideally check prior to attending a scene?

Answer 2

• Insurance coverage
• Underwriting history
• As much background info on insured or business as possible

Question 3

What are some ideal homework items to check on?

Answer 3

• Any proof of criminal activity, gambling or debt

- Any divorce, seperation or disputes between insured

Question 4

When arson is suspected, what eleven insurance coverage related indicators would you review?

Answer 4

1) Coverage was arranged shortly prior to loss
2) Coverage was increased/added shortly prior to loss
3) Property is heavily over-insured
4) The loss occurred shortly before expiration or cancellation date
5) Property owned for a long time before adding coverage
6) Many documents destroyed but insurance policy in tact
7) Duplicate/multiple policies through different agents/brokers
8) Facts misrepresented in application
9) Information provided to underwriters was misleading
10) Insured has extensive claims record
11) Insured call broker shortly before loss to check coverage

Question 5

When arson is suspected, what seven personal indicators would you review?

Answer 5

1) Insured was recently separated/divorced
2) Insured has onerous alimony/child support
3) Insured recently had employment problem, strike, layoff or business closing
4) Insured has a gambling problem
5) Bank has threatened to foreclose
6) Insured has an oppressive debt
7) Clues that suggest criminal activity

Question 6

What key two things might a trained investigator check for in fire claims?

Answer 6

Burn patterns and evidence of accelerants

Question 7

Define burn pattern

Answer 7

The path of travel and the shape of the charred areas from the point of origin of a fire

Question 8

Instead of portable detection devices, what has proven to be a better resource?

Answer 8

Dogs

Question 9

What are dogs utilized to detect an accelerant called?

Answer 9

Fire dogs or Ignitable liquid detection canines

Question 10

What could the point of origin tell you?

Answer 10

• It is often the most heavily damaged area
• If in an area where a fire starting is unlikely or if more than one point of origin appear, suspicion of arson may arise

Question 11

What are the two different burn patterns, and what do they tell you?

Answer 11

A “V” pattern indicates a normal burn without accelerants

An inverted “V” pattern usually suggests chemicals were used to accelerate the fire

Question 12

Define accelerant

Answer 12

A material that is used to start or spread a fire. It is usually a flammable to combustible liquid

Question 13

Define spall

Answer 13

A fragment, chip or splinter of stone or ore. Usually happens over time (erosion)

Question 14

Define trailers

Answer 14

Fast burning materials used by arsonists as fuses to rapidly spread a fire throughout a structure or area. They are called trailer because they leave “trails” of their burn pattern

Question 15

What are some examples of trailers?

Answer 15

Alcohol, lighter fluid or ketones

Question 16

What is the OFM?

Answer 16

Office of the Fire Marshal

Question 17

Who else may be involved in an arson investigation?

Answer 17

CAFI (Canadian Association of Fire Investigators)

Which includes:
Police, fire services, fire marshals, fire commissioners, engineers, adjusters, insurance industry professionals and individuals employed in legal professions

Question 18

What are the CAFI ethics standards?

Answer 18

• Loyal to organizations they represent
• Conduct personal/official life in a way to inspire the public
• Act fairly and impartially toward all people
• Not to use their position for personal advantage/profit
• Not to claim qualifications they do not have
• Not to betray a confidence or jeopardize an investigation
• Not to work with or provide info to people whose goals are inconsistent w/ CAFI
• To seek truth at all times

Question 19

Define Fire Marshal

Answer 19

A public official involved in fire prevention and in the investigation of fires, particularly where arson is suspected

Question 20

Define public adjuster

Answer 20

An insurance claims adjuster representing an insured on a fee basis in a claims settlement

Question 21

What was the relevance of Regina v. Ouida (Ontario) (1996)?

Answer 21

It was established that the Fire Marshal needed a search warrant because it was believed that arson was committed. Incriminating items were discovered but not admitted due to the lack of a warrant

Question 22

How are public adjusters similar to and different from independent adjusters?

Answer 22

Similar: they must be licensed

Different: restricted to certain types of claims

Question 23

What role does a public adjuster have?

Answer 23

Appraise damage, prepare estimates and claim documents, negotiate with the insurance company and speak on behalf of the insured

Question 24

What are some other possible indicators of arson?

Answer 24

• When did the fire start? early/late?
• What happened to special property & pets? perish, or removed before?
• Was it vacant, under renos or in need of renos?
• Does the lifestyle correspond to what they claimed?
• Do they have a mortgage or multiple mortgages?
• Who discovered the fire?
• Do the insureds have alibies?
• Are there any fire scene indicators (tampering, accelerants, explosions)?

Question 25

What are the three key elements to arson?

Answer 25

• The fire was set
• Insured had motive to set the fire
• Insured had the opportunity to set the fire

Question 26

List some deceptive financial practices

Answer 26

• Financial statements cannot be produced
• Invoices submitted by related companies could be fake
• Sales actually made after fiscal year end were included in statements to show stronger financial position
• Year end cut off is being manipulated
• Expenses are understated
• Many creditors have not been paid
• Purchase invoices have been suppressed

Question 27

List some sales indicators

Answer 27

• Sales are falling, the insured claims are increasing
• Fake sales are being recorded
• Sales recorded are out of proportion to prior period results
• Alterations made to purchases or sales invoices

Question 28

List some inventory-related indicators

Answer 28

• Inventory is obsolete
• Inventory is overvalued (could depreciate rapidly; or manipulating statements to make it look better than they are)
• Large purchases made just before claim in cash
• New and better products available at comparable cost
• Acceptable rate of turnover for inventory
• Large quantities of stock purchasing draining the company’s cash

Question 29

List some business-related indicators

Answer 29

• Area subject to economic recession
• New highway has significantly reduced traffic
• Competition is ruthless
• Product no longer viable or competitive
• Wants to get out of business quickly because of; disputes with partners/shareholders, labour problems, health problems, a decision to emigrate
• Insured cannot fulfill contracts because of; inadequate equipment, qualified help cannot be hired, materials unavailable
• Seasonal business has been affected by location or poor weather
• Zoning (loss occurs at end of season)

Question 30

What was the relevance of D’Amico v. General Accident Assurance Co. of Canada (1997)?

Answer 30

• Insured increased coverage shortly before a fire
• Insurer denied the claim alleging insured wilfully caused the fire
• Insurer had evidence of a poor financial situation
• Insured when called as witness, was not credible
• Court ordered that the insured repay the money from the claim

Question 31

What three things must be proven for theft claims?

Answer 31

• Value of items
• Existence of items
• Ownership of items

Question 32

What could be used as proof an item exists?

Answer 32

Receipts, cancelled cheques, photos, videos, credit card or bank statements

Question 33

What would you review of receipts for theft claims?

Answer 33

• Insured does not have any receipts
• Receipts w/ the follow chracteristics; photocopies, written by hand, from same store, consecutively numbered, in whole dollars, show no tax or tax is incorrect
• Receipts are presented right after in neatly arranged dossier
• Receipt and appraisal are from same store and for same dollar amount
• Store has no records to match receipt
• Store does not carry the item shown on receipt
• The item sells for much less than the amount shown on the receipt
• Many expensive items were purchased within short time frame
• Receipts for items available locally show a distant supplier/retailer
• Were just purchased

Question 34

What are some personal theft indicators of the insured?

Answer 34

• Is aggressively pushing to settle
• Unusually knowledgeable of claims process
• Eager to settle quickly, even at a discount
• Anxious to receive a cash settlement
• Significant loss record
• Unfamiliar with source, price or operation of equipment items claimed

Question 35

What are some general theft loss-related indicators?

Answer 35

• Insured has not reported to police
• Items reported stolen to police do not match items claimed
• Insured reports claim to insurer before notifying the police
• Supplemental list submitted to police is much longer than the original one
• No signs of forcible entry
• Items reported stolen are top of the line
• Expensive items paid for in cash
• Items normally kept in safety deposit box
• Burglar alarm has been disconnected/is defective
• Losses involving seasonal equipment or stock

Question 36

Define collusion

Answer 36

An illegal agreement between two or more persons to defraud or deceive another

Question 37

What are the five steps in establishing payment of a claim?

Answer 37

1) Establish the actual cash value of the repair
2) Ensure the material to be used is equivalent to the original
3) Detailed itemization of claim, no lump sums
4) Determine who must authorize the repairs
5) Check to see if there is other insurance available. Pay only portion required

Question 38

Why is it important to remove stock that has been damaged from a loss?

Answer 38

It could be stolen, damaged accidently or deliberately damaged after the fact

Question 39

What are the different arson crimes in the criminal code?

Answer 39

Arson - disregard for human life
Arson - damage to property
Arson - own property
Arson for fraudulent purposes
Holder or beneficiary of fire insurance policy
Arson by negligence
Non-compliance with prevention laws
Possession of incendiary material