Burning Down the House: Arson and Homeowners’ Insurance in Tennessee

Burning Down the House- Arson and Homeowners’ Insurance in TennesseeIn our piece about homeowners’ policy exclusions, we listed “intentional acts” as one of the more common exclusions. Arson – the deliberate act of setting fire to a property – will normally fall under “intentional acts.” Insurance policies almost always cover fire, but there’s a huge difference between a grease fire in the kitchen and deliberately setting your own home aflame.

Under normal circumstances, if you set fire to your house, pay someone else to set fire to your house, or are in any way involved with the intentional burning down of your house, your claim will be denied. However, if someone sets fire to your home and you have no knowledge of the act, your insurance carrier should pay out on that claim.

Proving arson

Generally speaking, an insured is the party who must prove that the loss falls within the parameters of the policy, but the insurance company is responsible for proving arson. In other words, a policyholder must only show that a fire loss occurred during the term of the policy, and then the burden shifts to the insurance company to prove it doesn’t owe for the claim, i.e., arson. This can make it more complicated for policyholders to obtain a payout when their property has been deliberately burned by someone else.

In 2013, Brandon McWherter and Clint Scott represented clients whose insurance company denied their fire damage claim under a policy that insured against “accidental” direct physical loss. The insurance company claimed that the clients had committed arson and that the clients had the burden of proving the fire was “accidental” pursuant to the terms of the insurance policy. Proving a negative (that they didn’t burn it) can be different, but fortunately the Judge disagreed and ruled that policyholders only have to prove a fire occurred, and then the burden shifts to the insurance company to prove arson. When the case went to the United States Court of Appeals for the Sixth Circuit, the Court pointed out that it is presumed in Tennessee that “the burning of a property is the result of an accidental cause,” and that because someone else set fire to their home, they “accidentally” suffered a loss. This decision upheld the long-standing rule that insurance companies must prove arson occurred.

Additional complications

A story of California from 2012 highlights a particular type of complication that can arise out of an arson claim. A couple is on the verge of divorce and the wife wanted to remain in the family home. The husband set fire to that home, completely destroying it. The wife submitted a claim, which traditionally would have been denied; you cannot collect on a claim if the act was intentional, after all. But in this case, the wife was deemed an “innocent co-insured” and she was able to collect on her claim because of the wording of her policy.

This is one reason why more and more insurance companies are changing the language of their policies, to ensure that they will not have to pay out a claim if the intentional act was committed by “any” or “an” insured (as opposed the “the” insured, which can be interpreted differently).

The vast majority of homeowners do not expect someone to set fire to their property, intentionally or otherwise. Still, it is an excellent idea to review your policies with your agent and a skilled Tennessee insurance disputes attorney before you sign anything. At the Gilbert Firm, we uphold the rights of policyholders throughout the state and assist clients whose claims have been denied for unfair or unjust reasons. To work with an experienced Tennessee bad faith attorney from our firm, please call 731-664-1340, contact Brandon McWherter or Clint Scott, or use this contact form to schedule a consultation at one of our office locations in Nashville, Chattanooga, Memphis, Jackson or Knoxville.