All too often in fire claims insurance companies are quick to deny a fire claim and assert that the insured was involved in setting the fire. But is it enough for the insurance company to merely assert that a plaintiff’s claim “may be barred or limited because of arson,” or does an insurer need to assert more?
This issue was recently addressed in a case we were involved in the United States Northern District of Indiana.1 The insured brought suit seeking to recover damages out of a fire that that destroyed the insured business property. In litigation, the insurer sought leave to add an affirmative defense that “Plaintiff’s claims may be barred or limited because of arson.” To support its position, the insurer asserted that “substantial circumstantial evidence” indicated that the fire was caused by arson. Notably, this purported evidence or facts supporting the defense was not identified. We opposed the insurer’s motion and argued that the proposed affirmative defense was conclusory and not plead with specificity.
The court concluded that the affirmative defense must contain a “short and plain statement” of the defense. The court went on to state that the affirmative defense was “not even conclusory” in nature because it did not state that the insured’s claims were barred because of arson, but rather merely alleged that they “may” be barred. The court concluded that the affirmative defense did not adequately put the insured on notice, that it simply referenced “arson” without alleging any additional information.