Editor's Note: The story that follows is based on fact. Thenames, places and descriptions have been changed to protect theguilty. This story was written for the purpose of providinginsurers, those in the insurance business, and the insurance buyingpublic sufficient information to recognize and join in the fightagainst insurance fraud.

Sometimes what appears to be an obvious arson-for-profit caseactually turns out to be an accidental fire. Our story beginswith an insured living near the ocean in San Luis Obispo,California. Recently divorced, the homeowner lived alonefor many months. The divorce had caused her much emotional trauma.After 25 years of marriage, the insured's husbandannounced he could not live with her any longer and promptly movedout.

The insured then sought treatment for herdepression, visiting multiple psychiatrists andpsychologists. These futile attempts to quell her miseryonly served to exacerbate it.

See related: Where There's Smoke, There's Fire – Red Flags

Shortly before the divorce was finalized, she happened upon anoccult bookstore while walking aimlessly through an older part ofSan Luis Obispo. She bought a book on the power of the mind. Thegood book gave her a life purpose, so she began to apply theprinciples stated in the book. Finding peace for the firsttime since her divorce, she became a regular customer of thebook store. A friendship grew between her and the owner, whointroduced her to others interested in the occult and powersof the mind. She applied for, and received, a divinity degree fromthe Universal Life Church. The insured bought her firstcrystal ball, on which she concentrated her psychic energiesafter receiving her degree. The occult, the powers of themind, and magic were the center of her life.

Later, with the divorce behind her, the insured allowed thebook store owner to move into the house. As they, and theirfriends, concentrated their psychic energies, they became convincedthat a major earthquake would strike California and destroy all wholived in San Luis Obispo. This convinced her that the only safeplace was a small community in northern Arkansas. So she puther house on the market and accepted the first reasonable offer ofsale.

Shortly before escrow closed, while the insured and her bookstore owner/boyfriend slept in the master bedroom, a fire broke outin the second bedroom of the house. Awakened by asound resembling a heavy rainstorm, they discovered the blazeand managed to escape (naked) through the bedroom windowand into the backyard. The neighbors called the firedepartment, which was able to quickly extinguish the fireafter all of the contents and most of the structure hadbeen destroyed.

Two damage claims ensued—one by the owner to her homeowner'sinsurance carrier, and another by the buyer, separately, toits insurer. They had never considered establishing who would havethe risk of loss during escrow and, therefore, both maintainedseparate insurance policies with separate carriers.

The investigation conducted by the fire department revealed thatthe fire was “suspicious.” It was unable to pinpoint a specificcause for the fire, which burned very hot. Therewere marks on the floor in the second bedroom that seemedto indicate that a flammable liquid hadbeen spread. Understandably, the insurer was concerned. Itdemanded the examinations under oath (EUOs) of the insured and herbook store owner love interest. Both testified clearly, concisely,and apparently honestly.

The duo testified, with vigor, about their belief in psychicpowers. Of course, both adamantly denied anyknowledge about the cause of or precipitating factorsleading to the fire.

Lingering Doubts

Their claim was indeed unusual. What's more, neither theadjuster nor counsel had ever received a claim for the loss (byfire) of three crystal balls. The value of the psychicparaphernalia was difficult to demonstrate. Convinced that an arsonhad indeed taken place, the fire department was stumpedby one question: Why then, had the insured and her boyfriendstarted the blaze while nude?

The insurer conducted a thorough investigation,which necessitated retaining the services of an experiencedfire cause and origin investigator. This expert siftedthrough the debris, where he found an electrically operated bed,equipped with a polyurethane foam mattress. The investigatoradvised the insurer that, after examining the bed and afterreviewing the testimony of the insured and her boyfriend atthe EUO, he concluded the fire was not intentional. Rather, hesurmised it was the result of a short circuit in the bedmotor that ignited the highly flammable—and nowbanned—polyurethane foam mattress. He explained that polyurethanefoam, when heat is applied to it, liquefies and burns vigorously.The liquefied polyurethane foam flows on floorsurfaces, leaving a trail similar to that left by thespreading of a flammable petrochemical accelerant.

With the mystery resolved, the insurer paid the insured the lossshe had incurred to her personal property. The two insurers splitthe cost of rebuilding the structure. The insured used theproceeds of the house sale and the insurance claim to relocateto Arkansas, where she now lives with her boyfriend and agathering of believers of the occult on about ten acres ofland.

Because both the insured and her boyfriend were ministersof the Universal Life Church, they performed their own wedding andare seemingly content, spreading the word of the power of the mind.Interestingly enough, the wedding ceremony was interrupted by anearthquake from the New Madrid fault registering 3.2 on the Richterscale. Fortunately, no one was injured. To date there has not beenan earthquake of any force near San Luis Obispo.

What appeared to be an obvious arson claim, with insureds whowere far from average, turned out to be an accidental fire thatresulted in an effective subrogation action by the insurer againstthe manufacturer of the bed. The insureds settled down to avoid aCalifornia earthquake on the cusp of the New Madridfault.