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Can insurance companies extend a fire by proving the cause and origin? | Property Insurance Coverage Right Blog



( Note: This guest blog is by Colleen Foster, a summer team office at our Chicago office. put the fire. But what happens when an insurance company does not formally claim burns in its letter of denial or in its response and affirmative defense? Is it enough to indicate a fire by proof of cause and effect?

The U.S. District Court of the Western District of Pennsylvania raised the issue in a recent case, American National Property & Casualty Company v. Felix [19459006 1 In this case, the insured's home and its contents insured under ANPAC's homeowners' insurance. The home was destroyed by a fire. ANPAC conducted an investigation in which the cause of the fire was "indeterminate." ANPAC had established that Felix participated in misrepresentation and false swearing by falsely claiming that certain property was destroyed in the fire. The insurer filed a complaint against Felix, which contained a claim for a declaratory judgment that the policy was invalid and that ANPAC had no obligation to compensate Felix for the fire loss because Felix made a material misrepresentation in his claim after the fire. In the preliminary proceedings, the trial decided that ANPAC's evidence of "suspected arson and cause and cause of origin in connection with the fire was inadmissible."

During the proceedings after the trial, ANPAC claimed that the court erred in excluding evidence of the cause and origin of the investigation into the fire at Felix's home. Felix claimed that the causal and original investigation and its results were irrelevant as to whether Felix subsequently mediated the destruction of certain objects in the fire. Felix also claimed that the evidence for the cause and the origin investigation and its results did not provide useful insight into how ANPAC handled Felix's allegations. The Court of First Instance considered that the evidence of the result of the investigation of cause and origin and all references to arson were excluded from property:

[The] central question in this case is whether Felix knowingly wrongly suggested that certain objects were destroyed during the 201

6 fire. . . [n] either of ANPAC's allegations … include the cause or origin of the fire in 2016.

The Court further held that the evidence of cause and effect of the investigation was irrelevant and prejudicial.

While other states, e.g. Illinois, has not yet addressed this specific issue, the trial for the Western District of Pennsylvania gives a strong warning to insurance companies that harks back to the lessons of law school – appeals the right answer and affirmative defense.
____________________________________ [19659008] 1 [19659009] Am. Nat’l Prop. & Cas. Co. v. Felix
399 F.Supp.3d 324 (W.D. Pa 2019).


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