Communication During the Investigation
excerpted from "Motive, Means, and Opportunity, A Guide
to Fire Investigation."
American Re-Insurance Company, Claims Division, 1996.
Communication between Law Enforcement and the Insurer During the Investigation
Arson reporting immunity statues allow for an exchange of information
between an insurer and law enforcement. These statutes should be utilized
for the mutual benefit of all conducting an investigation. They should not,
however, enable either side to conduct an incomplete investigation, relying
on the other side to complete its work.
If the insurer doesn't conduct its own careful investigation, the company
is at risk for the appearance of bad faith. An insurer's urging a law enforcement
investigation of its insured to better the insurer's position is taboo.
It can and often does result in damages being awarded to the insured outside
the initial contract.
1. Communication with The Insurance "Team"
Generally, an informal team is created when a claim representative, a
supervisor, an investigator, a fire investigator and an attorney are all
working on a property insurance claim. In ideal situations, the team will
work together and communicate with each other. However, more often the team
is compartmentalized with insufficient communication between the team members.
( a) The fire investigator conducts a cause and origin investigation
of the scene and only sends his report to the supervisor.
(b) The claim representative takes a preliminary statement from the
insured and provides the insured with an inventory form.
(c) The private investigator conducts a neighborhood canvass as directed
and reports to the supervisor.
(d) The supervisor assembles all of the reports and provides them to
the attorney with a request for an examination under oath.
(e) Compartmentalization makes it extra important that the supervisor
and the attorney be well versed in handling potential fraud cases. For
example, someone must assume ultimate responsibility for determining whether:
(a) The reports are complete
(b) The statements have any effect upon the opinion of the fire investigator
(This person should look to uncover questions which weren't answered in
the initial investigative process and prepare a checklist for follow-up
2. Communication with the Insured or the Insured's Representative
Communication between law enforcement and the insured generally will
be oral. The State Fire Marshal or someone else conducting the investigation
may direct the insured to appear at the fire station to give a statement.
There may be written requests for information if the insured is cooperative.
Alternatively, subpoenas may be issued if the insured is uncooperative.
Remember, the law enforcement investigation is not concerned about pre-serving
policy defenses or avoiding waiver-the insurer is!
Here are some guidelines on communication between insurer and insured-
(a) Initially, much of the insurance company's communication will come
from the claim representative.
(b) Once a claim is recognized as "suspicious," all communication
should be clear and polite, but firm.
(c) Communications should be well-grounded in policy provisions and
applicable case law.
(d) Quotations from the policy should be inserted in correspondence
to show why the company has a right to certain documents.
(e) If there is an indication that the insured may be claiming items
destroyed which were not even present, the company may wish to be helpful
in determining the extent of the loss by arranging for a meeting between
the claim representative and the insured.
(f) When an insured neglects or intentionally omits compliance with
certain conditions, reminders are required. Take a firm and consistent,
but not unreasonable, position with the insured. He should know that his
claim can't be decided until he complies with policy requirements.
(g) Keep the ball in the insured's court and act promptly whenever the
insured has supplied requested information.
IMPORTANT! All meaningful communications with the insured should be in
writing or confirmed in writing. Any correspondence may eventually be read
to a jury as evidence of good faith or the lack thereof.
The examination under oath is normally conducted after most of the investigation
is complete and the insured has provided the necessary documents. If the
insured is slow in producing documents, explain that an examination under
oath will be conducted, but a complete examination under oath may be needed
after he or she provides the documents. Remember, however, that if the insured
provides proof of loss, but is slow to provide other documents, a court
may require the insurer to act within 60 days of the submission of the proof
of loss. This may happen even if the insured has not yet provided an examination
3. Communication with the Mortgagee or Other Insureds
(Normally the insurer will contact the mortgagee shortly after the loss
in order to get copies of the mortgage, the note, and the payment records.)
(a) If the claim of the named insured is not paid, the mortgagee must
be given an opportunity to file a claim.
(b) A mortgage clause provides a separate contract with the mortgagee.
As a result, if the mortgagee has not participated in the negotiations,
the mortgagee is not bound by a settlement negotiated between the insured
and the insurer for less than policy limits.
(c) When you're communicating with the mortgagee, the insured or other
loss payees, avoid making promises about settlement by a certain date.
(d) Withhold details about the company's reasons for believing the claim
is suspicious and requires further investigation.
(e) Law enforcement may contact the mortgagee and loss payees directly.
They may also simply rely on the insurance company records of communication
with these parties.
* This section is based upon, and contains excerpts and
quotes from - Beyer, John A., "Archeology, Psychology, Cognition ...
and Other Lofty Thoughts on Fire Investigation," The National Fire
& Arson Report, Vol. 12, No. 1, March 1994, and is used with the permission
of John A. Beyer.
Reprinted with permission.