What is Homeowners Insurance Fraud?

When someone willfully files a claim for more money on their homeowner's or renter's insurance policy than the loss or damage warrant, this is an example of the sort of fraud known as "inflated claim fraud." It is also considered homeowner fraud to submit a claim that is false or deceptive to collect compensation that is not due.

The following are the most typical types of fraudulent activity involving homeowner's insurance:

• Exaggerating the amount of money that can be made off of stolen goods in a home or car burglary
• Misleading statements regarding the damage's nature, scope, date, or location.
• Causing intentional damage to property to file a claim
• Putting on a fake home invasion or car break-in and pretending that property was stolen or damaged is a false crime.
• Request that a repairman "pay the deductible" by boosting their estimate or fee to do the job.
• The practice of creating fictitious supporting evidence, such as repair invoices or receipts, typically in conjunction with a dishonest contractor, plumber, repairman, or insurance adjuster
• Disguising the fact that a dwelling is being used in a commercial enterprise or as a rental property

Consequences For Making False Claims On Renters' Or Homeowners' Insurance

Even if the home insurance fraud does not rise to the level of a criminal (and even if you are found not guilty), the mere fact that an investigation was opened into possible fraudulent activity could make it difficult for you to obtain insurance in the future. It may be difficult to purchase a home if you are under investigation or have been convicted of homeowners insurance fraud. This is because many home financing agreements require that homeowners insurance be included in the loan terms. If you can obtain insurance following an investigation into homeowners' or renters' insurance fraud, the premiums for your policy can be higher than they normally would be.

How Can I Safeguard Myself Against Fraudulent Activity With My Homeowner's Insurance?

Just tell the insurance company the truth about everything. When you get a homeowners insurance policy for the first time, the insurance company will ask you questions about the location and condition of your home, as well as your past claims and other information. Give honest responses to the questions asked. When something unfortunate occurs and you need to submit a claim, you should get in touch with your insurance agent as soon as possible and be completely forthright about what was lost or destroyed. If you are sent a check for the repairs, you need to ensure they are completed. Suppose you need to make another claim later, and the initial repairs were never completed. In that case, your insurer may become suspicious of you, particularly if you try to claim the initial damage again.

One such method of self-defense is to insist that other people answer for their actions. When a contractor says they will "cover your deductible," you might assume they are not proposing to pay it themselves. This may mean they'll give you a discount, but then they'll charge your insurance company for more money than you owe them. This way, the insurance company pays out will also cover the deductible on your homeowner's or renter's policy. Be cautious if a repair person, contractor, or other vendor is offering something that seems too good to be true. Accepting this kind of offer could get you involved in a renters or homeowners insurance scam regardless if you aren't or are aware of what the person is doing.

If you believe or find out after the fact that a repair person, contractor, or other vendor has been engaging in dishonest behavior (for example, if the bill they provide you and the amount the insurance company pays out don't match), you should report it as soon as possible.