With the foreclosure crisis still rippling across the American economic landscape, some desperate property owners may be turning to a drastic form of insurance fraud -- burning down their own homes.
Arson insurance fraud involves home and business owners setting fire to their properties so that they can get insurance money to pay off loans and mortgages. While arson is nothing new, it may be especially enticing to those who owe more on their mortgages than what their homes are worth, according to the Coalition Against Insurance Fraud. This also can occur in disaster-ravaged areas as homeowners try to maximize their insurance payouts, according to the Louisiana Department of Insurance.
If a fire is an accident, or if a random arsonist sets fire to your property, your insurer will pay your claim. However, if you set the fire on purpose (or if you hire someone to do it), your home or business insurance company will not pay for it -- and you could end up in prison.
Arson is a serious crime in all 50 states, and the statistics are unsettling. According to the Insurance Information Institute, more than 56,000 cases of arson were reported to the FBI in 2009. And this was actually a drop from 2008, when 63,253 offenses were reported.
About 14 percent of arson cases are insurance-motivated, according to the Insurance Research Council, and it's an expensive crime. Arson led to the destruction of nearly $800 million worth of property in 2009 -- down from about $1 billion worth of property damage in 2008, according to the National Fire Protection Association.
Insurance companies and law enforcement alike have an interest in thoroughly investigating the true origin of fires because arson can cause tragic loss of property and life -- and boost the cost of insurance for all policyholders. In fact, many insurance companies now have special arson fraud divisions dedicated to investigating suspected arson.
Still, some property owners have gone to great lengths to mask their crimes. For example, Samuel White of Houston allegedly painted racial slurs on his own home before burning it down in 2005, according to the Coalition Against Insurance Fraud. Further investigations revealed that what seemed like a hate crime actually was an attempt to evade foreclosure -- and that all the furniture had been removed before the fire.
If your neighbor commits arson, your life, property and home insurance premiums are in danger. The Louisiana Department of Insurance advises taking note of suspicious behavior. If anyone you know has financial motives to commit arson, which happen to coincide with a fire, contact local law enforcement.
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