Legal Definitions - arson clause

An arson clause is a standard provision found in most property insurance policies. It states that the insurance company will not pay for damages or losses caused by a fire if the policyholder intentionally started the fire or arranged for it to be started. This clause prevents individuals from profiting by deliberately destroying their own insured property.

• Imagine a restaurant owner, Mr. Chen, whose business has been struggling financially for months. Desperate, he intentionally sets fire to his restaurant one night, hoping to collect insurance money to pay off his debts. When he files a claim, the insurance company investigates and discovers evidence that the fire was deliberately set by him. Because of the arson clause in his commercial property insurance policy, the company denies his claim, and he receives no payout for the damages.

• Ms. Rodriguez owns a house that is heavily mortgaged and in need of extensive repairs she cannot afford. Feeling overwhelmed, she decides to burn down her home, believing her homeowner's insurance will cover the "accidental" loss and allow her to start fresh. However, during the investigation, forensic evidence points to her involvement in starting the fire. The arson clause in her homeowner's policy means her insurance claim will be rejected, leaving her responsible for the remaining mortgage and without a home.