Fire Losses - Investigation and Analysis.
Being considered as Mother of all Perils in Insurance, the high cost of Fire losses highlights the significance of detailed investigation required for it.
There are two core requirements to establish Fire, within the ambit of an Insurance Policy, as ascertained from the UK Case Law:
1) There must be something on fire that (normally) should not be on fire.
2) There must be actual ignition i.e. there could be no Fire, under Insurance Policy, without actual ignition. A flame must be there to be a fire within the definition of the Insurance Policy. Otherwise, the claim shall not be admissible under the Fire peril of the Policy.
The following guidelines should be kept in mind by Loss Adjusters / Surveyors which have been compiled through collection of experiences in various Fire Losses, augmented by learning outcomes through knowledge-sharing with Global Experts on the subject. The list is not exhaustive and a Loss Adjuster may have to take more pains, depending upon circumstances in each case.
While approaching a Fire Scene, a Loss Adjuster / Surveyor should observe the following at a Fire Scene and, as soon as conditions permit, initiate documentation of the information, including writing notes, taking photographs, voice and video recordings etc.
Observations from Outside the Property:
1) Ensure that a safe distance is maintained from the Structure of the Building to avoid unusual accidents.
2) The presence, location, and condition of victims and witnesses for collating necessary evidences into the cause of Fire.
3) Weather conditions at the time of Fire. An important factor that may aid in either aggravation or reduction of Loss. For example, Fire on a rainy day may be easy to suppress. On the other hand, Fire on a windy day may not only be hard to put off but may also easily spread to adjoining Properties.
4) Conditions surrounding the Scene e.g. blocked roads and debris and damage to other structures that may hinder and create obstacles for mitigation of the loss such as Fire Brigades and Ambulances etc.
5) Vehicles leaving the scene, bystanders, or unusual activities near the scene. This is very important, as the Loss may have resulted due to other perils not covered under Standard Fire Policy such as Malicious Damage, Riot and Strike, and Terrorism etc. for which Special Perils coverage is sought. Another aspect is that the Fire may have spread from someone else's property or causeddue to negligence of any other party. This would entitle the Insurer to commence legal exercise against the negligent party to recover some or full amount of Loss under Subrogation rights.
6) Flame and smoke conditions including the volume of flames and smoke color, height, and location of the flames and the direction in which the flames and smoke are moving. This is necessary as adjoining Property Owners may Claim damages as Third Party Loss caused to their property due to Fire at the Insured's Property.
Observations from Within the Property:
1) Most Loss Adjusters in our Industry often ignore the very first step i.e. to evaluate the scene for safety hazards. For example, a structural collapse of the building, electrical and chemical hazards and other health risks that may not only aggravate the Loss but also put the lives of Loss Adjusters and other people into risk.
2) Establish layout of the premises with a diagram. Plans, photos and sketches from the Pre Insurance Inspection File and / or Fire Department may be used for this purpose. Identify all entry and exit points including windows.
3) The Fire suppression techniques used, the status of Fire alarms, Security alarms, and Sprinklers. This is to evaluate that information provided in the Proposal Form was correct on the basis of which Underwriters proceeded to estimate the risk and were not misled at the time of buying Insurance coverage.
4) The type of Occupancy and use of the Property. This is essential because residential occupancy being used for business purpose would give rise to the notion of Utmost Good Faith resulting in declinature due to misrepresentation.
5) Unusual characteristics of the scene e.g. the absence of normal contents, or expensive items, machineries and unusual odors. This is to ensure that the Loss is genuine, not fraudulently fabricated and exaggerated by the Insured to gain additional Financial benefits under the Policy against the principle of Indemnity.
6) Explore Insured's theories as to why the Fire would occur, including motives and threats by workers, competitors or any other person to burn the Property, or dangerous conditions that might contribute to accidental fire. If the Insured is also a witness, determine when he made his observations about the nature, color, location, intensity, duration of the Fire and Smoke and also have him identify other conditions of the scene, including signs of forced entry and unusual smells.
Being Good Listener is one of the most powerful tools for any Loss Adjuster and Surveyor. Some Insured or their representative may offer unfair opinions, but many can provide valuable historic information including any Claims history, which can be confirmed or denied through careful analysis.
Determining whether a Fire related claim provides indemnification, or not, requires special investigation and technical skills as well as special equipment. Fire Ignition Sources may often be lost in big fires and may not be discoverable without seeking forensic assistance.
Therefore, it is strongly recommended that Insurance Claim for Fire Losses may not taken lightly as the financial consequences of a mistake by a Loss Adjuster / Surveyor could be gruesome either for the Insured or for Insurers.