What type of coverage would apply if an insured intentionally sets fire to their home and there is a total loss?

• A. Homeowners insurance will cover the entire loss.
• B. The insured will receive no payment due to intentional loss.
• C. Insurance will cover the mortgage amount only.
• D. Only personal property damage will be covered.

Answer: (B)

In the scenario where an insured intentionally sets fire to their home, the principle of insurance regarding intentional acts applies. Insurance policies generally contain a clause that excludes coverage for losses resulting from intentional acts of the insured. This means that if the insured was found to have intentionally caused the loss by setting the fire, they would not be entitled to receive any payment or compensation from the insurance company for that loss.

The rationale behind this is rooted in the ethical and legal obligations of an insurance contract. Insurance is designed to protect against unintentional losses and risks. Allowing coverage for intentional acts would undermine the integrity of the insurance system and encourage fraudulent behavior. In this context, the principle of utmost good faith (uberrima fides) is fundamental, meaning that both parties must act honestly and not deceive each other. Therefore, since the loss was intentionally caused by the insured, they would receive no payment for the total loss of the home.