Vytenis Babrauskas, Ph.D
Arc mapping was first introduced in the 2001 edition of NFPA 921 and was subsequently expanded so that in the recent editions it constitutes one of the four main methods for determining the origin of a fire. Careful consideration of engineering principles and large-scale experimental studies on the subject indicates that the relevance and prominence of arc mapping as a leading indicator of fire origin is greatly overstated. The technique is valid and applicable only in some very limited scenarios. Yet it has seen very extensive use in recent years by investigators preparing fire reports. In many cases, such attempted use of arc mapping is based on incorrect and invalid hypotheses, which are often implicitly assumed to be true instead of being explicitly stated. The following are myths: (i) An abundance of arc beads at a given locale means that fire originated in that area, while a paucity of arc beads indicates that it did not. (ii) When multiple arcs are present on a circuit, the direction of arcing will necessarily proceed upstream towards the power source. (iii) If an appliance is the victim of a fire, internal arcing will be primarily near the exterior of the unit, while arcing deep inside indicates a fire origin at that place. NFPA is urged to revise NFPA 921 to eliminate arc mapping as one of the four main methods for establishing fire origin, and to subsume it under the more general category of “fire patterns.” In addition, it is important that NFPA 921 reduce the implied general utility of the method and provide more explicit information on its interpretation and its limitations and on the circumstances under which it may be a valid method for assisting in the determination of the fire origin.
Vytenis Babrauskas, Ph.D.
Short circuits to building wiring can happen due to electrical mishaps, or as a result of fire impinging on the wiring. In either case, this may cause arcing. It is sometimes erroneously assumed that this must produce signs of ‘electrical activity,’ which is a term often used by fire investigators to mean discernable arc marks or arc beads. While such artifacts may indeed be produced, it is shown that it does not necessarily happen in every case. Shorting and arcing (whether due to fire or due to an accident) may occur without leaving physical evidence that is discernable as an arc bead. Ejecta also may, but do not have to be produced. Some variables have been identified which can influence the size of arc beads, when arc beads are produced. But stochastic aspects dominate, and no predictive correlations can be expected. It is also shown that there are no prediction methods available to establish if an arc locale will result in severing or welding together of conductors.
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.
From: The Desk of Scotty Baker
To: The CCAI Training Committee
Over the last several training seminars, even as an old hand, I have learned new information concerning fires and how they do what they do.
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The focus will be on Report Writing, Arc Mapping and Ignition Sources, Social Media as an Investigative tool, Fundamentals and more.
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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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