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Abstract Candles can enhance décor or be a source of light. However, they can also start fires. National estimates of reported fires derived from the U.S. Fire Administration’s National Fire Incident Reporting System (NFIRS) and NFPA’s annual fire department experience survey show that candles were the heat source in an estimated average of 9,300 reported home fires annually during 2009-2013. These fires caused an average of 86 civilian deaths, 827 civilian injuries and $374 million in direct property damage per year. More than one-third (36%) of home candle fires started in the bedroom. Almost three of every five (58%) fires occurred because the candle was too close to something that could burn. Candle fires are most common around the winter holidays. Candles used for light in the absence of electrical power appear to pose a particular risk of fatal fire. Home candle fires climbed through the 1990s but have fallen since the 2001 peak. ASTM F15.45 has developed a number of standards relating to candle fire safety. Despite the considerable progress made in reducing candle fires, they are still a problem. In 2009-2013, candle fires ranked second among the major causes in injuries per thousand fires and average loss per fire. Efforts to prevent these fires must continue.

Abstract

Candles can enhance décor or be a source of light.  However, they can also start fires.  National estimates of reported fires derived from the U.S. Fire Administration’s National Fire Incident Reporting System (NFIRS) and NFPA’s annual fire department experience survey show that candles were the heat source in an estimated average of 9,300 reported home fires annually during 2009-2013.  These fires caused an average of 86 civilian deaths, 827 civilian injuries and $374 million in direct property damage per year.  More than one-third (36%) of home candle fires started in the bedroom.  Almost three of every five (58%) fires occurred because the candle was too close to something that could burn.  Candle fires are most common around the winter holidays.  Candles used for light in the absence of electrical power appear to pose a particular risk of fatal fire.  Home candle fires climbed through the 1990s but have fallen since the 2001 peak.  ASTM F15.45 has developed a number of standards relating to candle fire safety.  Despite the considerable progress made in reducing candle fires, they are still a problem.  In 2009-2013, candle fires ranked second among the major causes in injuries per thousand fires and average loss per fire.  Efforts to prevent these fires must continue.

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Abstract

Upholstered furniture has long been the leading item first ignited in terms of home fire deaths. Based on data from the U.S. Fire Administration’s (USFA’s) National Fire Incident Reporting System (NFIRS) and the National Fire Protection Association’s (NFPA’s) annual fire department experience survey, NFPA estimates that during 2010-2014, upholstered furniture was the item first ignited in an average of 5,630 reported home structure fires per year. (Homes include one- and two-family homes, apartments or other multiple family homes, and manufactured housing.) These fires caused an estimated annual average of 440 civilian deaths, 700 civilian injuries, and $269 million in direct property damage. Overall, fires beginning with upholstered furniture accounted for 2% of reported home fires but 18% of home fire deaths. Smoking materials remain the leading cause of these fires and associated losses.

 

 

NFPA Research

Abstract

Upholstered furniture has long been the leading item first ignited in terms of home fire deaths.  Based on data from the U.S. Fire Administration’s (USFA’s) National Fire Incident Reporting System (NFIRS) and the National Fire Protection Association’s (NFPA’s) annual fire department experience survey, NFPA estimates that during 2010-2014, upholstered furniture was the item first ignited in an average of 5,630 reported home structure fires per year.  (Homes include one- and two-family homes, apartments or other multiple family homes, and manufactured housing.)  These fires caused an estimated annual average of 440 civilian deaths, 700 civilian injuries, and $269 million in direct property damage.  Overall, fires beginning with upholstered furniture accounted for 2% of reported home fires but 18% of home fire deaths.  Smoking materials remain the leading cause of these fires and associated losses.

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Fact Sheet

Automotive Battery Explosions By Charles C. Roberts, Jr., Ph.D., P.E.

As shown in Figure 1, the typical automotive battery, of lead/acid construction, is an electrochemical container that produces voltage, which causes electrical current to flow to various components in an automotive vehicle. An outer polymer case (high density polypropylene) acts as a container for an electrolyte (sulfuric acid), six cells and lead plates. Each cell delivers 2.1 volts with a total voltage of 12.6 volts, at full charge.  Vents are installed at the top of the battery to vent gasses formed during the normal charging cycles.

Figure 1

During the charging cycle, hydrogen gas is generated and accumulates in the head space above the electrolyte level, prior to venting. Hydrogen gas has a wide range of explosive limits in air, ranging from 4 to 72% hydrogen in air and is easily ignited by a flame or spark. If the hydrogen is ignited inside the battery, it typically blows off the top of the battery case, showering sulfuric acid in the immediate vicinity along with fragments of the battery case. The explosive energy generation is so rapid that the vents cannot relieve the pressure in time to prevent an explosion.

Figure 2 is a view of a two year old battery that exploded, causing personal injury from acid burns. This occurred when a standby generator was starting during its normal maintenance test cycle. The top of the battery was blown away, suggesting that hydrogen was ignited inside the battery.  Figure 3 is a view of a battery fragment that was found imbedded in the ceiling of the building that enclosed the generator.

Figure 2

Figure 3

Figure 4

Inspection of the battery shown in Figure 2 revealed that one of the intercell connectors (Figure 4) was loose and corroded. A loose connection inside a battery can result in an electrical arc jumping across the gap, igniting the hydrogen.  In this case, the loose connection was determined to be a result of a manufacturing defect.

Other internal explosive ignition conditions may exist that are not related to a manufacturing defect:

  • A conductive bridge may be formed between two plates as a result of low electrolyte levels. When a high current demand is placed on the battery, it can arc, igniting hydrogen gas and initiating an explosion. This is a result of improper battery maintenance where the electrolyte level should be monitored periodically and lost electrolyte replaced.  Maintenance free batteries have a hydrometer that measures the specific gravity of the electrolyte (an indicator of the concentration of the electrolyte and hence, the electrolyte level) and indicates whether or not a battery should be replaced.
  • External ignition sources often manifest themselves in the form of loose battery cable connections or a poor connection with battery charger clamps that generate an electrical arc. Jump starting vehicles with dead batteries can result in electrical arcs at the dead battery terminals if the last set of clamps is attached to the dead battery. Recommended procedure is to attach the jumper clamps to the dead battery first and then to the live battery.
  • Battery explosions have occurred as a result of tools being placed between the battery terminals. Some individuals test a battery by placing a screw driver across the terminals to see if an arc jumps, revealing whether the battery is supplying electrical energy or not. This can result in a battery explosion since the current through the screw driver is not regulated, can be very high and generate an electrical arc, causing an internal or external explosion.
  • Corrosion, which can cause electrical resistance and a possible arc ignition source, may develop at battery terminals as shown in Figure 5, which also illustrates a loose or improperly secured battery clamp.

Figure 5

As in most investigations, retention of the evidence is desirable if subrogation is anticipated. In battery explosion losses, fragments may be found scattered throughout the scene and imbedded in the building structure. Collecting these pieces helps the technical analyst determine the cause of the explosion. It is encouraged to have the battery analyzed in a timely manner to reduce the effect of corrosion, which can obscure evidence.

From Out of the Abyss...

This week’s article from the past is titled Incendiary Fires Can Be Spotted and was written by Benjamin Horton, CPCU, who was President of the National Adjuster Traing School in Louisville, Kentucky..  It is taken from the Decembe 1968 Vol. XVI No.5 issue.

Incendiary Fires Can Be Spotted 

In the new issue of NFPA Journal®, President Jim Shannon said the Association will focus on the leading causes of home fires, including cooking. "We also need to continue to push hard for home fire sprinklers. That's still a large priority for NFPA, and we plan to work very aggressively in 2014 on our residential sprinkler initiative," he said.

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NFPA 921, Guide for Fire and Explosion Investigations plays a fundamental role in fire and explosion investigations. A new edition of NFPA 921 is scheduled to be published in 2014. For years, this document has played a critical role in the training, education and job performance of fire and explosion investigators. It also serves as one of the primary references used by the National Fire Academy to support its fire/arson-related training and education programs. It is imperative that investigators understand the scope, purpose and application of this document, especially since it will be used to judge the quality and thoroughness of their investigations.

NFPA 921, Guide for Fire and Explosion Investigations plays a fundamental role in fire and explosion investigations. A new edition of NFPA 921 is scheduled to be published in 2014. For years, this document has played a critical role in the training, education and job performance of fire and explosion investigators. It also serves as one of the primary references used by the National Fire Academy to support its fire/arson-related training and education programs. It is imperative that investigators understand the scope, purpose and application of this document, especially since it will be used to judge the quality and thoroughness of their investigations.

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Practical Approaches for Recouping Good Faith Payments

Larry-Arnold-article

by: Larry Arnold

Faced with growing losses, insurance companies are focusing on fraud management and implementing risk mitigation controls, while at the same time remaining cognizant of their duty of good faith to policyholders.  So what happens when an insurer makes good faith payments on legitimate elements of an insurance claim but subsequently uncovers fraud in other elements of the claim?  Is the insurer entitled to recover all monies paid as part of the claim?  Or only the amount paid in reliance on the insured's misrepresentations?

Previously, there was no clear answer.  It was safe to assume that an insurer could recover monies paid on a claim under the right circumstances – the difficulty occurred when trying to recover payments made prior to the established fraud date.  For example, in California, the insurance code states, “If a representation is false in a material point, whether affirmative or promissory, the injured party is entitled to rescind the contract from the time the representation becomes false.”

Recent trial court rulings in favor of insurance companies, however, are changing the claims landscape.  These rulings will impact the way insurance companies handle genuine claims that are subsequently tainted by fraud, encouraging them to be proactive in recouping good faith payments.

Steps for Recouping

What options do insurance companies have to recoup these payments?  There are several avenues available.

Deny the Claim. When the SIU has completed a claims investigation and determined that an insured has breached the policy by materially misrepresenting facts, the claim can be denied – even the legitimate part.  Appropriate cases should be referred to law enforcement for prosecution.  In addition, the insured has a duty to present and prove the merits of the claim.  Failure to cooperate with insurance company representatives can independently result in denial of the claim.  This includes an examination under oath (EUO), which plays a key role in obtaining information.  Typically, the named insured (or others, as dictated by the policy) is required to submit to an EUO as a precondition for claims settlement.  Failure to do so can result in denial of the claim.

Void the Policy. An insurer may void or cancel its policy in the event of material misrepresentation or concealment of facts by the insured.  This includes fraudulent claims.

Litigation. If a policy is voided for fraudulent claims, insurers must then decide whether to sue the insured to recoup payments - even legitimate ones.  One advantage with litigation is that it allows for pretrial discovery process, including depositions and the ability to subpoena documents previously unavailable during the claims process.

A Case in Point

A recent case illustrates that insurance companies are entitled to recoup good faith payments when fraud is uncovered.  Here is some background on the case.

An insurer issued a fire insurance policy to the owner of a dry cleaning business located in Southern California.  A fire destroyed the business, so the owner submitted claims for replacement equipment, debris removal, damage to customer goods and loss of business income.  Based on these claims, the insurance company paid the owner $527,000.

However, during the insurance company’s investigation of additional claims, a forensic accountant uncovered inconsistencies in a laundry services contract submitted as part of the owner’s claim for loss of business income.  As a result, the owner was asked to sit for an EUO.  The owner declined and withdrew his pending claim.  The insurer then declined the claim, rescinded the policy and sued the business owner to recoup all loss payments.

At trial, evidence and witness testimony was presented that showed the owner had falsified the laundry contract and also inflated amounts paid for replacement equipment, debris removal, and payroll, among other items. Attorneys argued that the insurer was entitled to full recovery (payments made before the fraud occurred) for several novel reasons, including:

  • The outcome in Perovich v. Glen Falls Insurance Co. (9th Cir. 1968), where the court ruled that an insurer “may recover money paid in reasonable reliance on its insured’s fraudulent claim.”  The court held that the insurer was entitled to recover the full payment made under the policy.
  • Compelling the insured to return only a portion of the money would circumvent the purpose of the fraud statutes and create bad public policy.  The insured’s fear of losing even the legitimate claim payments should deter him from committing fraud.  An insured who knew he could recover the “honest” claims would be incentivized to calculate the risk of getting caught into his claims submission, determining that some things are worth lying about.

Though portions of the claim were legitimate, the judge ruled in favor of the insurer and its decision to rescind the fire insurance policy.  The insured was ordered to repay $452,064, which represented all payments less monies paid to customers who lost clothing in the fire and the policy premium.

Implications for Insurers

This decision is important as it reinforces the rights of insurance companies not only to decline a claim when fraud is uncovered but also to rescind a policy and sue the insured to collect good faith payments.  Previously, the law was not clear about what happens to monies paid as part of a legitimate claim, when fraud is discovered in a separate area.  It is now clear that fraud in part of a claim translates to fraud in the entire claim.

Claims managers should have an open discussion with claims adjusters and SIU team members, with the goal of establishing a claims review protocol that outlines what to look for and what to do if fraud is suspected.  This is critical, as claim adjusters are the first line of defense against fraud.  Once fraud is uncovered, insurance companies should not hesitate to consult with an attorney and pursue the insured in order to recover monies already paid.  In the end, both insurance companies and policyholders will benefit by reducing the high cost of fraud.

Larry M. Arnold, P.C., is a senior partner at Cummins & White, LLP.  He can be reached at (949) 852-1800, This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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