The deteriorating economy appears to be having an impact on our business. We are being referred more insurance disputes involving losses that are directly the result of the souring economy.
For the first time in a decade, we have been referred several fire claims that are allegedly of an incendiary (intentionally set) cause.
There are a number of reasons why fires are intentionally set. Statistically, the most common cause is adolescent males simply setting fires to property. Arson for profit is fairly rare, but insurers understandably hire specialized fraud attorneys, such as Barry Zalma, to take Examinations Under Oath and conduct investigation.
More and more buildings are unoccupied or vacant. When a building does not have somebody in it, the structure becomes an easier target for arsonists, vandals, and thieves. Accordingly, there appears to be more of these losses. Since policies often restrict coverage of and have exclusions that apply only to vacant or unoccupied buildings, more insurance coverage disputes occur.
For example, Tina Nicholson, of our Houston office, recently settled a case for a client where numerous break-ins, thefts, and vandalism had resulted in damage to the building. The policy at issue had specific clauses regarding exclusions and exceptions to exclusions pertaining to vandalism, theft and damage caused by burglars breaking in or exiting the building.
The Motion for Partial Summary Judgment and Memorandum of Law filed by Tina analyzes this very complex insurance coverage issue. These pleadings should be read by two types of people–those wanting to understand highly technical differences in the wording of commercial insurance coverage disputes and those that need help going to sleep. For such a commonplace loss scenario in this economic climate, the resolution depends upon which state law applies and the exact language of the policy in question.
If the economy worsens, I expect we will see more of this type of loss. Risk managers and property managers should carefully review their policies to make certain this type of loss is covered. I am fairly certain that adjusters in the industry have been made aware of the limitations in some of the policies.