The fact that there is little or no financial gain in setting a home on fire may explain why investigators are seeing so few cases of suspected arson involving houses threatened with foreclosure.

When a home is destroyed by fire, insurance will cover the replacement cost of the home. However, whether the fire is a result of arson or other means, the lender will be named on the insurance settlement check.
 
In 2007, California recorded 481,392 notices of default. However, while the number of foreclosures has skyrocketed, potential foreclosure-related arsons have not followed suit. Only 14 arsons potentially related to foreclosure were reported in 2007 by the California Department of Insurance.

“If you are concerned about not making your mortgage payment, contact your lender as soon as you can,” said Candysse Miller, executive director of the Insurance Information Network of California. “There may be no quick fix to credit trouble, but homeowners seem to realize that arson is not a path to financial recovery.”

The consequences of committing insurance fraud and arson, both felonies, are more dire than the consequences defaulting on a mortgage.

A conviction of insurance fraud or arson will result in jail time. Insurance fraud alone can result in up to five years jail time and penalty fees up to $50,000, and the penalty for arson could result in jail time from 5-to-20 years.

“People who look to arson as a solution to a pending foreclosure will do time,” said Frank Scafidi, director of public affairs with the National Insurance Crime Bureau. “And then when they get out of jail, they will still have a mortgage to pay. Arson is not an option.”

IINC is a nonprofit, non-lobbying communications association representing the property/casualty industry. For more information, or to arrange an interview, please contact media relations at (800) 397-1679.

The National Insurance Crime Bureau is the nation’s leading not-for-profit organization dedicated exclusively to preventing, detecting and defeating insurance fraud through information analysis, investigations, training and public awareness.