Home Insurance Forum

Aug. 24, 2007

Recently, our neighbor's house burned to the ground. This fire also damaged our home. We have recovered from our insurance company but would like to recover our deductible from our neighbor's insurance company.

Both companies claim that since the fire was classified as an accident, meaning no one was at fault, we have no claim to the deductible. Is there any truth to their answer, or can we press for indemnification for our deductible from the neighbor's insurance company?

Gaetan, Vermont

Dear Gaetan,

We asked Bill Wilson, director of the Independent Insurance Agents of America's Virtual University about the likelihood that you would receive reimbursement for the deductible.

The fact that the fire was an accident is meaningless, Wilson says. The owner of the home where the fire started can still be legally liable. For example, if the fire started because of an overloaded electrical outlet, that's an "accident," but the person can still be responsible for negligence in overloading the circuit.

Your neighbor's home insurance policy probably includes "a coverage in the liability section called 'damage to property of others'." Wilson explains, "This coverage is available, without regard to fault, when the insured damages the property of others. In other words, even if the insured is not legally liable, this 'goodwill' coverage — as it's sometimes called — is available when the insured causes a loss, even an accidental one."

Wilson says the typical policy language usually reads: "Damage to Property of Others. We will pay, at replacement cost, up to $500 per 'occurrence' for 'property damage' to property of others caused by an 'insured.'"

"It's hard to imagine a scenario, short of a natural cause beyond the other homeowner's control (e.g., lightning), where the homeowner would not be legally liable for damage to a neighbor's home that resulted from a fire that began in his home," Wilson adds.

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