Give It Up—Vehicle Fires & Frauds
Jim Hammonds | September 14, 2009
Owner give-up. The term conjures up a resigned individual, relinquishing a beloved item such as an old bar fridge or a 1970s wood-panel station wagon.
Unfortunately, in insurance-speak, the term is used to describe an action often taken during times of economic distress— such as a credit crunch, coupled with rising gas prices, and double-digit unemployment. Over the last 18 months, a few people are resorting to ‘owner give-up’—a type of insurance fraud that results in the willful destruction of a vehicle in order to process a claim.
Often this type of fraud is prompted by the economic strain of vehicle ownership during hard economic times. When drivers can no longer afford their vehicle they resort to extreme measures by arranging for the car or truck to be damaged or stolen. An insurance claim is then submitted for the loss. Not only is the loss fraudulent but many of these vehicles end up being recovered by police burned and abandoned. The rationale for the burned state is that it ensures that the vehicle is not going be repaired and returned to the owner once recovered. Simply put: The owner doesn’t want their car back. They want the claims payout.
According to the U.S.-based National Insurance Crime Bureau (NICB) claims related to suspicious vehicle fires/arsons were up 27% in 2009 compared to 2008, with owner give-ups increasing by 24% this year.
Given that general insurance fraud costs Canadian insurers $1.3 billion (CDN) each year, it is extremely important that carriers and their adjusting departments utilize all tools available to fight owner give-up fraud.
Rules of Thumb for the Investigator
The first rule of thumb, however, is to enter each investigation with an open mind. While many recovered burned-out vehicles are a result of intentionally set fires, it is important adjusters go into each investigation with an open mind.
First Rule: One good way of consistently achieving this open-minded approach to attempt to disprove potential causes of a vehicle fire (rather than focusing on and trying to prove one potential cause).
Second Rule: Remember that arson is not considered an acceptable cause of a vehicle fire. Arson is a criminal term used only in court. Instead, focus on the four accepted causes of fire (according to the NFPA 921’s Guide for Fire and Explosion Investigations, the definitive universal standard on fire investigation methodology, technology, and science): accidental, natural, incendiary and undetermined.
Fire Classifications:
Accidental fires are those that are not the result of a deliberate (intentional) act. This also encompasses fires that are ignited deliberately but become hostile, such as intentionally ignited brush or trash fires that spread beyond their intended confinement.
An incendiary is a fire deliberately lit despite proof that a fire should not have started. Intent is a key element of this fire classification.
A natural fire occurs without human intervention, and includes fires as a result of natural phenomena, such as lightning, wind and earthquakes.
And undetermined fire is the classification used for fires that have not yet been investigated, for fires under investigation, and for fires that have been investigated and the cause is not proven to an acceptable level of certainty.
Third Rule: An investigator should not be afraid, or pressured, into ruling on the cause of a fire.
How Vehicle Fires are Different
While an investigator doesn’t need to have a degree in fire science, it is important to have at least a general understanding of it. First, there are several factors that make a vehicle fire different from the standard structure fire.
Typically the traditional burn patterns seen on structure fires will not be present on vehicle fires. On average, a vehicle has over 900 pounds of combustible material present in a small, confined area. This allows the fires to spread more quickly and can prompt explosive combustion. Vehicles also are ‘convenient’ for fires as they have the fuel load and ignition sources all in one tightly packed vicinity—Engine compartments have fuel and other ignitable liquids flowing through them in close proximity to electrical power sufficient to ignite them. Also, vehicles wear out faster than standard structures and change from year to year.
Most motor vehicles contain three distinct compartments; engine, passenger and cargo. Many people have a misconception about the ‘firewall’ between the engine and passenger compartments. A true firewall, like in structures, will prevent fire from spreading across the structure. The vehicle’s firewall, more commonly called a bulkhead, can have the opposite effect and often aids in the fires spread. Every time an opening occurs in the bulkhead to allow wires, ducts or other components to be run, that allows a path for the fire to spread. Those wires and air ducts often serve as a fuel load for the fire, as well.
Also, a fire needs three facets in order to be sustained: fuel, heat and oxygen.
Oxygen: While there is 21% oxygen in the air, only 16-17% is needed to support flame. Under 10%, the combustion will slow and then stop (burn itself out).
Fuel: Commonly, fuel comes in three states: Solids, such as wood, paper and plastics; liquids, such as gasoline and kerosene; and gases, such as natural gas, LP and acetylene.
Heat: The heat to ignite the fuels can come from electrical, solar, nuclear, mechanical or chemical reactions.
While many fires will start from someone pouring gasoline on the vehicle and taking a match to it, it is possible to introduce the right combination of chemicals and walk away. The chemical reaction of those items will generate their own fire, without putting a flame to it, which will then ignite the rest of the vehicle.
Red Flags To Watch For During Investigations
There are several fraud indicators, or red flags, which can assist an investigator or claims associate when dealing with a vehicle fire.
For example, when a fire is deliberately set, it is quite typical to find the vehicle completely cleaned out of all personnel items and, if found, there will only be one key in the vehicle. People who are intentionally setting fire to the vehicle do not want to burn their music CD’s, wallets, money or other items along with the vehicle. In the same vein, if they have several keys on their key ring, they are not going to want to burn their house keys along with the vehicle keys.
Another indicator is the financial state of the claimant. Many people will purchase vehicles well beyond their means only to realize they cannot afford to keep up the payments. Instead of repossessing the vehicle, they opt to have it ‘stolen’ and burned. Look into possible financial difficulties both related to vehicle payments as well as other difficulties they may be having (liens, judgments etc).
Another red flag is a hot spot. Hot spots are places in the vehicle where no natural fires can start. For example, the back seat of a vehicle will not spontaneously combust without help.
Also, check the maintenance records for the vehicle. Many times when a vehicle owner finds out about a costly repair they may opt for an ‘owner give-up’ than pay for repairs.
As the economy continues to suffer, and gas prices continue to rise, insurance carriers will continue to see an increase in deliberately set fires and owner give-ups. While not trying to lead anyone to jump to conclusions, it is important for the investigator and claims associate to be aware of these rising incidents when investigating vehicle fires.
Jim Hammonds is a lead investigator for GEICO Insurance in Atlanta, GA. He is a Certified Fire and Explosives Investigator (CFEI) and has earned the Fraud Claims Law Specialist (FCLS) designation. |
