Home Kitchen Fires Becoming More Prevalent

How do you remodel your kitchen when you don’t have the funds? Normally, people will save up the money, or take out a home equity loan. And then there are people who will just set the kitchen on fire with the hopes that their insurance company will pick up the tab. Unfortunately, kitchen arson seems to be a growing trend in Florida.

According to the Sun Sentinel, there are now two state task forces that are handling the investigations of this trend.

South Florida had nearly half of the state’s fraud-related home arson cases investigated by the Florida Division of Insurance Fraud in fiscal year 2010-2011, state records show.

This scheme, which could result in higher premiums for other policyholders, is due to homeowners who are trying to get insurance money to use for home renovations.

Herb Price, who investigates insurance fraud in Florida for the National Insurance Crime Bureau says “It’s scary, because there’s a lot of money going out to pay these claims.”

Investigators have spotted a pattern: First, a homeowner leaves food cooking on the stove while they rush to the store for a missing ingredient. The oil then supposedly catches fire and a pan falls on the floor and breaks a tile. A public adjuster, who earns a percentage of the claim payout, inflates the estimate for repairs and renovations.

According to the Division of Insurance Fraud, between 2007 and 2011 the number of suspicious insurance claims that could be linked to home arson more than doubled in Florida –from 31 to 74. Many of those came from South Florida, where 28 cases were reported in 2010, with 11 of them coming from Miami-Dade, Palm Beach and Broward counties.

The state set up two task forces in South Florida to investigate these suspicious kitchen fires, and so far several public adjusters and Miami homeowners have been arrested.

Price noted that more cases are also under investigation in Broward and other parts of the state.

“It first looked like it was a small ring of people in Miami. Now its spread to a lot of people,” said Price. “They think it’s a good way to fund a new kitchen renovation.”

Rich Wickliffe, who oversees State Farm’s investigation unit in Florida, notes that investigators with State Farm are spending a lot of time and money looking into the suspicious kitchen-fire claims, which can cost up to six figures a piece.

Wickliffe also notes that it is unclear how much these fraudulent claims are costing other policyholders. “You have people who can’t really sell their homes and they look at their lime-green kitchen and want something else,” he said.

According to a Miami-Dade arrest warrant, there were five Miami public adjusters arrested for their roles in two kitchen-fire schemes in May of 2010 by the state’s Kitchen Fire Task Force.

One homeowner told investigators that an adjuster, Jorge Antonio Espinosa, used a hammer to smash kitchen tiles in her southwest Miami-Dade house. The kitchen was apparently made to look like it accidentally caught fire when the woman left chicken frying on the stove.

Espinosa broke the tiles to make it look like damage from the pan falling so they could get more money from Federated National Insurance Co., the report stated.

Espinosa later submitted a claim for $69,000, a percentage of which he would get to keep. He and four of his employees were later arrested on numerous charges, ranging from organized scheme to defraud, grand theft, and tampering with evidence. The result of the case is still pending in Miami-Dade Court.

It is also unclear if the homeowners are under investigation for arson or fraud.

As noted in a 2010 report of the Florida Department of Financial Services, the scheme has spread through word of mouth as people hear about payouts that cover a complete kitchen remodeling.

One flaw for the homeowner is that they never call the fire department, which is not necessary when filing an insurance claim. Instead, the person will bring in a public adjuster to assess the damage, so by the time an insurance company sends an investigator out, the kitchen has been cleaned up.

A spokesperson for State Farm, Chris Neal, said “these are incredibly difficult claims to prove.”

State records show that few investigations lead to arrests and even fewer to convictions. In most cases, a crooked public adjuster will tell the homeowners how to start the fire and get away with the scheme, the state financial services report said.

“The public adjuster knows how to coach them,” said Wickliffe of State Farm. “Lo and behold, they get a whole new kitchen.”

In Davie on June 30, 2010, state investigators trained about 150 public adjusters and investigators on how to spot red flags in kitchen fires. Lynne McChristian, the Florida representative of the Insurance Information Institute, said that the state is required to investigate each suspicious claim to keep property insurance rates from going up.

McChristian also noted that sometimes an investigator is able to recover fire debris and test it for accelerants such as gasoline or lighter fluid, even though most often, homeowners have cleaned the evidence by the time investigators are called in. When accelerants are detected, police can build a good arson case.

For example, a Hialeah man was arrested in 2009 for arson and insurance fraud after lab tests found traces of gasoline in his kitchen fire.

Cristain Rodriguez Acosta admitted to setting the fire and causing $100,000 in damage to his home so he could renovate his kitchen with insurance money, according to the State Fire Marshal’s Office.

“Most people don’t think of arson as insurance fraud, but it is,” McChristian said. “All policyholders end up paying for it.”