CHAPTER 1 - Identifies and defines relevant terminology — heating system, venting system, flue gases, chimney, vent. Types of chimneys -- metal, factory-built, and masonry -- are identified and their construction discussed. Chimney performance requirements are listed. The purpose and function of flue lining are detailed. Flue lining systems are described, and alternatives are identified.
CHAPTER 2 - Chimney Fire is defined and sources and causes are identified. Fuels and other combustibles — creosote, wood, soot — are identified and discussed. Thermal characteristics of chimney fires and the evidence that a chimney fire has occurred are presented. The potential damage to the chimney, to other objects, and to the house are detailed.
CHAPTER 3 - Thermal damage to clay flue lining is described. Thermal stress theory and concepts are identified, including stress resistance, steady state conditions, transient conditions, and thermal shock. Also included are discussions of how the shape of the flue influences damage caused by chimney fires.
CHAPTER 4 - A guide to the evaluation of chimney fire damage, emphasizing the importance of searching for and verifying evidence of causes and effects of chimney fires. Also, evaluation of other possible causes of chimney damage —lightning, thermal expansion, material fatigue, moisture, weathering, freeze/thaw damage, flue gases, condensation, rotational and differential settlement.
CHAPTER 5 - Application of insurance to chimney fire damage, Identification of available homeowners’ policies and their provisions and coverage. Coverage for damage under the fire peril is detailed. Procedures and criteria for recognition and evaluation of a valid chimney fire claim are discussed, as are arguments not relevant to proper consideration of insurance coverage.
This recall involves AC power cords sold with Microsoft Surface Pro, Surface Pro 2 and Surface Pro 3 computers before March 15, 2015. Surface Pro and Surface Pro 2 devices have a black case with the product name on the back of the device toward the bottom. Surface Pro 3 computers have a silver case with “Windows 8 Pro” on the back of the device under the kickstand. This recall also involves accessory power supply units that include an AC power cord sold separately before March 15, 2015. The recalled power cords do not have a 1/8-inch sleeve on the cord on the end that connects to the power supply.
Get the details at CPSC
The recall includes three models of the Dirt Devil Total Pet Cyclonic Upright vacuums, model UD70210, UD70210CA and UD70210RM. The model number and manufacture date code are printed on a silver label on the back side of the vacuum. The vacuums are identical with black, gray and clear housing with red and purple trim. “Total Pet” is printed underneath the Dirt Devil logo in the center of the vacuum. Only vacuums with the first three digits of the four digit manufacture date code that begin with B14 through I15 are included in the recall. All recalled vacuums were manufactured between February 2014 and September 2015.
This recall involves KUL small, black portable fan heaters. The KUL logo is printed on the front bottom of the heaters next to the power dial. The fan heater measures about 9 inches long by 5 inches wide by 10.5 inches tall. The fans weigh about two pounds. An adhesive label is on the bottom of the heater with model number “KU39229” and “Date: 0515” in the lower right-hand corner.
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.
At the door:
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:
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,
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