Insurance fraud is a serious offense and can result in serious charges. Fraud of any sort not only affects the one committing the fraud but also countless innocents who had nothing to do with the fraud. In the case of homeowners insurance fraud, insurance companies may need to raise premiums across the board due to someone committing fraud.
Yet, people still commit insurance fraud. Different types of insurance hold different methods of fraud, and homeowners insurance fraud is one of the most common. It seems easy to exaggerate your repair claim or to file a false claim and so many people attempt it. As easy as it is to attempt, it’s even easier to get caught doing it and the punishment can be severe.
Fines, loss of insurance, and even jail time are what you might face if you attempt to commit home insurance fraud. But what exactly is considered home insurance fraud? Well, there’s plenty of different cases that are considered fraud, some as simple as claiming a belonging was more expensive than it was, others as big as fabricating the claim itself.
Insurance fraud happens often and can be hard to discover yet damaging to both the insurance company and other policyholders. Stopping insurance fraud could start with you and reporting suspicious activity is the first step to protecting yourself from the effects of fraud.
Common examples of fraud
Different types of home insurance fraud include the following.
Overstating stolen items’ value
One of the most common forms of insurance fraud is to claim that an item stolen in theft was worth more than originally thought. It’s hard to trace how much an item was worth when the item is gone and those who commit the fraud take advantage of this issue.
Asking a repairman to exaggerate the repair cost
Most insurance claims are based off an appraisal or an estimate issued by a repair company. Some homeowners might ask the repair company or appraiser to claim a higher cost to repair. The insurance company sees this and will issue a higher payout if not detected.
Staging an accident or theft
Homeowners might file a completely false claim and when an appraiser comes to assess the damage, they find a staged event. This is when no damage really occurred, but the homeowner wants to make it look like something happened to receive insurance money.
Lying about location or extent of damage
Sometimes homeowners could lie on their claim that the damage was more than it was. If a fire broke out and burnt a wall, a homeowner might claim the fire destroyed the whole kitchen, hoping to receive more from the insurance company.
Fabricating bills or receipts
In order to properly file a claim, the insurance company requires evidence of the cost for repairs and if the damage never occurred, you have no evidence. Some homeowners may go as far as to create their own recipes of the repair costs or amount stolen so the insurance company will pay them more.
Old damage becomes new
After a hurricane comes through and wreaks havoc on neighborhoods, some claims could be false. If a homeowner had damage that was left untreated from years ago, they might use a storm as a cover to get the insurance company to repair the issue.
Each of the above examples are common forms of insurance fraud and can be easily spotted in the claim process. A common way that insurance fraud is caught is when the money received does not go towards repairing the home and the damage is left unrepaired.
Penalties for insurance fraud
As mentioned before, the penalties for committing insurance fraud can be substantial and long-lasting. Committing insurance fraud can lead to heavy fines that can hurt your wallet with anywhere up to $15,000 in fines. When found guilty for insurance fraud, finding a new insurance provider can be nearly impossible as your reputation will remain tainted.
Jail time is a real possibility for those who commit insurance fraud. Most home insurance fraud arrests can lead to up to seven years in jail. Repeated attempts at insurance fraud can result in extended jail time. One woman faced up to 60 years in jail for three separate insurance fraud attempts.
Home insurance fraud can hurt all policyholders even if they aren’t associated with the committed fraud. Successful insurance fraud can leave the insurance company in a tight spot and insurance premiums could rise. Stop insurance fraud if you see it happening.
Report insurance fraud
If you know someone who is committing or has committed insurance fraud, report it to the proper authorities or insurance fraud organizations. The quicker you report the fraud, the easier it will be to prevent any damages from occurring. You’ll save both yourself and countless policyholders the headache of higher premiums resulting from fraud.
Back in June 2021 we signed a contract with UNI adjusting group to get a new roof on our home. Our homeowners insurance okayed the claim to pay for our new roof. They mailed UNI two checks totaling 14,000.00 and they cashed them on Aug 12 2021! I have proof of these checks cashed by Uni. We have never received our new roof and can not talk to anyone from their office, I have left countess messages and emails with them! We are not the only ones they have scammed and our still doing it today! They need to be held accountable for scamming people!