Cedric Stephens, Contributor
QUESTION: On January 11, 2013, at about 10 o'clock, my 2008 BMW motorcar caught fire while I was driving from Montego Bay to Kingston. The fire, which destroyed the car, was extinguished by the fire services. My insurer is alleging that I deliberately set fire to the car. I feel like I am going to lose everything if I don't take the company to court. Should I do so?
- M.J., Montego Bay PO, St James.
HELPLINE: When an insurance company accuses a claimant of intentionally setting fire to property in order to collect insurance moneys this is a very, very serious issue.
In some countries, insurers go much further than yours have done. They share the results of their investigations and the evidence that they have collected with the police. This is in the expectation that criminal charges for fraud will be brought against the claimant.
You need the services of an attorney to protect your interests and, where necessary, help to prove to the insurer that your claim is not fraudulent.
Insurers play hardball in cases where claimants are dishonest. The fraud condition in the contract gives them the right to punish claimants. Punishment can take the form of withholding policy benefits - at best - or criminal prosecution plus nonpayment of the claim, at worst.
In theory as well as in practice, insurance companies have the legal right to act as though a contract never existed when fraud is alleged.
The fact that your car was destroyed by a fire does not automatically trigger a payout from the contract. It is your duty to provide proof that the loss occurred in accordance with the terms of the contract.
To use a legal term, the onus of proof is on you to prove your loss.
The proof should take the form of clear and convincing evidence that establishes the fact that the fire that destroyed your car was accidental. The word 'accident', from which the adjective accidental is derived, is crucial in understanding the last statement.
The My Law Dictionary defines accident as "an unforeseen, unexpected event; an occurrence by chance and not by design. In the context of an automobile insurance policy, the term includes any event that occurs unintentionally, even if due to negligence, rather than to forces beyond anyone's control".
Your insurers have either concluded that the evidence that you gave them does not meet the definition of accidental, or they have collected persuasive proofs that the fire was deliberately set.
When you have discharged the duty imposed on you under the onus of proof doctrine, that burden shifts to the insurance company.
The investigation that they carried out was part of a process to find out whether the fire was accidental in its origin or was intentionally set.
When those enquiries ended, your insurers concluded that the fire was not accidental and communicated this to you. Once again, the onus of proof has now shifted back to you to show that the evidence your insurers have collected about the origin of the fire is false.
I have seen no evidence, either from you or your insurer, which proves whether the fire was accidental or was deliberately set. I cannot, therefore, form an opinion one way or the other. This is an issue that is best left for your lawyer.
A recent article in this newspaper stated that our economy has been in a state of decline for the last five consecutive quarters and that unemployment is increasing.
Conventional wisdom in insurance circles is that some insurance buyers set fire to their insured assets - like motor vehicles - in order to obtain cash. Put less diplomatically, the incidence of insurance fraud is said to increase during times of economic hardship.
Our legal system is not known to dispense justice very quickly. In the absence of evidence that conclusively shows that the fire was accidental, expect your insurers to play their game of hardball for a very long time.
I hope that my pessimism about the outcome of your claim turns out to be wrong.
Cedric E. Stephens provides independent information and free advice about the management of risks and insurance. Email firstname.lastname@example.org. SMS/text message to 812-7233.