Well, first of all you don't give enough information for us to respond adequately. Are you the owner of the building? A unit? The landlord or a tenant?
You will really need to consult with a landlord/tenant attorney in your area. Being untruthful in making false representations in a contract could be construed as fraud which may or may not open you to liability on that front.
If you are a landlord then you (or your entity) could likely be sued directly for damages.
DISCLAIMER: Brandy A. Peeples is licensed to practice law in the State of Maryland. This answer is being provided for informational purposes only and the laws of your jurisdiction may differ. This answer based on general legal principles and is not intended for the purpose of providing specific legal advice or opinions. Under no circumstances does this answer constitute the establishment of an attorney-client relationship. For legal advice relating to your specific situation, I strongly urge you to consult with an attorney in your area. NO COMMUNICATIONS WITH ME ARE TO BE CONSTRUED AS ARISING FROM AN ATTORNEY-CLIENT RELATIONSHIP AND NO ATTORNEY-CLIENT RELATIONSHIP WILL BE ESTABLISHED WITH ME UNLESS I HAVE EXPRESSLY AGREED TO UNDERTAKE YOUR REPRESENTATION, WHICH INCLUDES THE EXECUTION OF A WRITTEN AGREEMENT OF RETAINER.
Making misrepresentations is ethically bad and legally very risky. You could be exposing yourself to both criminal and civil liability depending on the circumstances and to whom you make the misrepresentations. In short, do not do it. The potential consequences outweigh any potential benefits.
If a lawsuit is filed, the other parties can and will discover the existence of your insurance. If you represent in a settlement agreement that you have no insurance, you can be used for fraud.
Finally, the purpose of insurance is to defend and indemnify you in these types of situations. If the insurance picks up the claim, they will hire lawyers to help advise you and attempt to resolve the claim within policy limits, if possible.
Under the circumstances posed by your question, only a foolish ignorant person would fail to report the matter accurately to their insurance company.
With respect to the lie about coverage -- the consequences depend on who you lied to and why and the reason you are responsible, i.e., whether the fire was intentionally or negligently set by you or someone for whom you are required to respond in damages.
Depending on the exact facts lies in this circumstance could produce both criminal and civil liability. Good luck.
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