Insurance companies deny fire claims either genuinely or out of bad faith, and sometimes they won’t even give clear reasons behind the denial.
If you have had such an encounter or are doing research before taking out a fire insurance policy or homeowners insurance policy, you may be interested in knowing the major reasons insurance companies deny fire claims. Now that you are here, let’s get to it!
Reasons for Denial of Fire Claims by Insurance Companies
Insurance companies may reject fire claims for the following reasons:
1. Suspected Arson or Fire Insurance Fraud
If your insurance company suspects that you set your building on fire intentionally to defraud them of insurance money, they may refuse your fire claims.
Evidence of arsonist behaviour in the past or proven fraudulent claims of fire damage or similar types of damage will cause the company to reject your claim.
Sometimes, a rogue company may front the fraud issue out of malice to delay the payment with a dragged-out trial to prove whether arson caused by the claimant or a person acting on their behalf was the cause of the fire.
To counter the company’s argument, you must have enough credible evidence that you were not the arsonist or that no one acted on your behalf as the arsonist. It should also be proven that the fire was not caused by arson.
2. Dishonesty or Misrepresentation of Crucial Information
Some fire claimants distort the truth or withhold crucial information from their insurance company regarding the source of the fire or even the property insurance claim itself.
Claimants who lie or omit such crucial information usually do so out of fear that the company may blame or fault them for the fire.
Once the insurance provider learns the truth, your claim will be denied.
3. Insufficient Policy Coverage
Your fire claim will be denied if the policy doesn’t include the type of fire that razed down your premises. The policy may also only cover damages that directly result from flames rather than smoke or water from fire sprinklers.
For example, a fire caused by a catastrophic occurrence, such as war, may not be covered in your policy, and the insurance provider will deny such a claim.
4. Disputes in Valuation
An insurance company will deny your fire claim if it assesses that the damages sustained are worth much less than you claim. If you have inflated the fire insurance claim, your request will be denied.
Most insurance providers will give you a first offer that’s usually lower. Accepting this offer means that you might be shortchanged, so you should always try to get more from them if your damages are worth much more.
To avoid the problem of delays caused by conflicting valuations and making counter offers, ensure you always have records of the building’s construction costs, repair and maintenance costs, and its state before and after the eruption of fire.
5. Lack of Proof
You must prove that you own the items included in your fire damages claim. The value of these items must also be known and provable. There should be sufficient proof of the extent of fire damage.
Your insurance company will deny your fire claims if these proofs are not available or verifiable.
6. Poor Craftsmanship/Design
The fire claim will be denied when a fire erupts in a home or commercial building because of poor artistry or construction design.
The poor condition of the building will be seen as a predisposing and precipitating factor to the occurrence of a fire, something that would have been prevented if you and your contractors were keen enough.
The claim may also be denied if you constructed it with materials that relevant authorities or manufacturers have since recalled for poor performance or ineffective fire protection.
7. Unpermitted Building Works
Fire claims after a fire stemming from unapproved works on a building won’t be approved. For example, if you maintain the electrical system yourself and a fire erupts through the system, you will not be compensated.
A trained, licensed, and trustworthy professional must complete all building repairs and maintenance activities. They must also be recorded for proof of validity, cost, and completion.
8. Fire Safety Negligence/Poor Preventative Measures
Lack of good and timely fire safety measures or preventative interventions will lead to the cancellation of your claim.
You must ensure your electrical and all fire equipment, such as Shutguns, extinguishers, and sprinklers, are kept in good working condition.
You’ll also not be compensated if a fire arises from a failure to repair past damages, natural wear and tear, or failure to prevent future losses.
9. Illegal Activities
Your insurance carrier will deny your fire claim if it’s proven that illegal activities such as manufacturing or selling hard drugs or illicit alcohol took place on your premises.
This is particularly critical if the cause of the fire was such drugs or misconduct of people intoxicated by the drugs.
Other Reasons Insurance Companies Deny Fire Claims
- Your building caught fire from nearby buildings that spread the fire to it (this may not be in the policy coverage)
- Unpaid policy premiums or late payments
- Not filing claims immediately or in good time
- Underinsuring your personal property
- The cost of fire and smoke damage sustained is lower than your deductible
- The policy has expired, or you canceled it before the fire occurred
Preventing Fire in the First Place
Although fire is sometimes an inevitability, taking appropriate measures to prevent its occurrence can help you avoid the back and forth that happens when your insurance company denies a fire claim.
Installing fire prevention equipment such as extinguishers, sprinklers, and our quickstop fire sprinkler tool can help you avoid fire and water damage.
We can save you thousands with Shutgun in the form of fire damages, water damages, and losses from a denied fire damage claim.