insurance

Arson (Insurance)

In insurance terms, arson refers to the intentional and malicious burning of property, which is typically excluded from coverage when committed by the policyholder. However, if arson is committed by someone else without the insured's knowledge or involvement, the damage may be covered under most property insurance policies.

Example

“The insurance company's investigation determined that the warehouse fire was arson committed by vandals, so the business owner's claim for $2.3 million was approved.”

Memory Tip

Remember 'Arson' as 'Are-Son' burning - if you (or your son) intentionally burn it, insurance won't cover it.

Why It Matters

Understanding arson exclusions protects you from inadvertently voiding your coverage through intentional acts, while also ensuring you know you're covered if someone else commits arson against your property. This knowledge is crucial for business owners and homeowners in areas where arson might be a concern.

Common Misconception

Some people believe that all fire damage involving arson is automatically excluded from insurance coverage. However, coverage typically depends on who committed the arson - if you or someone acting on your behalf set the fire, it's excluded, but if strangers or vandals committed arson, you're usually covered.

In Practice

Tom's restaurant suffered $180,000 in fire damage, and investigators determined it was arson. Initially, the insurance company denied the claim suspecting Tom's involvement due to his recent financial difficulties. However, after a thorough investigation, police arrested a disgruntled former employee who confessed to setting the fire. Since Tom had no involvement in or knowledge of the arson, his insurance company paid the full claim amount minus his $5,000 deductible, allowing him to rebuild his business.

Etymology

Derived from the Old French 'arsoun' and Latin 'arsio,' both meaning 'a burning,' specifically referring to the criminal act of deliberately setting fires.

Common Misspellings

arsenarsionarsinarsone

Related Terms

Special Investigation Unit

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