Time Limits - Most homeowner policies require the property damage victim to submit what is called a Sworn Statement in Proof of Loss within 60 days of the loss date. At its bare minimum this is a time limit to provide your insurance company the initial scope of damages. It can be supplemented for unknown damage but it is a term that is part of the insurance policy and may be held against you for lack of diligence. Sixty days is not a lot when you have lost your home or business. Other issues occupy your time. Back to the point, without prior agreement the 60-day language in the policy is binding.
Duty to Cooperate - The homeowner must cooperate with a reasonable investigation by the insurer. You may not misrepresent a material fact, which can be a basis for denying the claim. The insurance companies are typically allowed to take recorded statements, request documents, have access to the damaged property, and take examinations under oath. Having an attorney with insurance claims experience is invaluable for presenting the facts in the most favorable way according to the policy, statutes, and Illinois court interpretations.
Arson– If your fire was intentionally set you should retain an attorney. Even if no one in your household did it, consider representation. Until the authorities and insurer are satisfied that someone else started the fire, and without your knowledge, you will be the initial suspect. The insurance company may not pay your claim if you started the fire, caused someone else to start it, or if they think they can make a good faith allegation of either.
If the cause of the fire cannot be readily determined the insurance company will bring in an origin and cause fire expert. The insurance company may mistakenly decline coverage on a theory of arson. You need an attorney to ensure the insurance company is held to the level of proof required by the case law in Illinois before it declines coverage for arson.
Contentious relation with insurance company adjuster– Many people believe insurance company advertising and assume it will honorably pay the correct amount of compensation after the fire. There is usually a honeymoon period where the insurance company adjuster is very friendly and accommodating. He knows public adjusters are courting you and you may be considering hiring an attorney. The insurance company usually does better negotiating a fire claim where the insured does not have professional representation.
The adjuster may demand a recorded statement early on or suggest you take a polygraph exam (see below) as a way to intimidate you.
If your insurance company adjuster shows any signs of aggressive behavior you should seriously consider hiring a lawyer with insurance claim experience. This is a long adversarial negotiation and if you get a pit bull style adjuster he will wear you down no matter how strong you think you are. For him it is not personal, it is about saving his company money, sometimes at the expense of a good faith claim on your part. For you it is very personal and you are liable to get frustrated and commit some type of error that can harm your claim.
Examination under Oath (EUO)– Most homeowner policies allow the insurer to demand you submit to an examination under oath. The typical location of the examination is at the office of the insurance company attorney and is attended by a court reporter, the insurance company adjuster, the insurance company attorney, and you the insured.
In my experience insurance companies use this tool towards the end of the claim, after the sworn statement has been submitted. Typical areas of inquiry are personal background information, items of high value, and any areas where coverage may be in dispute.
Because these examinations under oath are intimidating, many people reach out to an attorney after receiving such a demand. This is a good idea because your answers can either help or hurt your claim. Claims can be denied for material misrepresentations of fact and an attorney can help prepare you for the types of questions that may come up. Coverage can hinge on seemingly innocent twists of factual scenarios. Your attorney can help by asking clarifying questions where a vague answer might lead to a wrong conclusion by the insurance company.
Intentional act of insured– This is related to arson except there is no malicious or economic intent to start the fire. An example would be a suicide attempt by a family member that catches the home on fire. A domestic altercation may lead to a kitchen fire. Intentional acts by an insured can be grounds for denial of coverage.
There are defenses to denial of coverage for some intentional acts. Because these defenses are very fact specific and are based on interpretation of past legal cases you should definitely consider hiring an attorney early on who is experienced in fire claims.
Polygraph examination– Illinois law makes it an improper claims practice to “request or require any insured to submit to a polygraph examination." IL. Admin. Code Title 50, Ch. 1, Sub Ch. 1 § 919.60(d). Notwithstanding this prohibition some old time insurance company adjusters still make such requests to intimidate the insured. If a polygraph exam is even suggested you should immediately seek the service of an attorney experienced in insurance claims. If the insurance company is going to violate your rights by requesting a polygraph then the rest of the claim will not go any better.
Recorded Statement– Under many policies the insurance company has a right to request a recorded statement. This is similar to an examination under oath in that it is recorded and often later transcribed. The difference is that you are not under oath. That does not mean, however, that you are free to lie. Material misstatements of facts can always be used as a basis to deny coverage so in this respect the same pitfalls await an unwary homeowner in a recorded statement as an examination under oath.
If the insurance company requests you submit to a recorded statement agree to give the statement but request a future date that is convenient to you, the company adjuster, and your lawyer. Don’t feel as if having representation makes you look evasive or guilty, the insurance companies have well staffed legal departments.
Request by insurer for financial documents– Most policies allow the insurer to conduct a reasonable investigation to satisfy itself as to the merits of your claim. At the same time the policy gives you a duty to cooperate with the investigation. Your failure to cooperate may be grounds for denial of coverage.
Oftentimes a homeowner will get a request by the insurance adjuster for tax returns, bank statements, and credit card statements as part of their right to investigate. Think though, what is it they are investigating? Financial motive.
Couple this investigation into motive with a fire of indeterminate origin and an overzealous adjuster may send you a denial of coverage letter claiming arson and citing your motive and opportunity.
If you get a request for financial documents you will probably need to comply under the terms of many policies. You should also consider hiring an attorney to determine the extent of your compliance requirements. The attorney can also ensure the company adjuster’s file contains your side of the story.
Reservation of rights letter - If you get a letter from your insurer claiming to reserve its rights with regard to your insurance claim, you should immediately consider legal representation. Essentially what the insurance company just said is that while it will continue adjusting and negotiating your claim, don’t take that as affirming coverage because it may eventually decline to cover your loss.
Insurance companies do not send reservation of rights letters to policyholders lightly. The letters cause high anxiety to its customers and strain the negotiating process. They are based on some information developed by the insurer that has led it to believe some defense to coverage may exist.
Because all information the insurer develops from this point forward may confirm or refute its belief that coverage may be declined, an attorney should be consulted to read the policy, evaluate all prior communications, and develop facts if available that tend to confirm coverage.