When you put a proper homeowner’s insurance policy in place for your home, you expect it to cover you. Likewise, your homeowner’s policy expects you to take proper care of it. What does that mean, exactly? It refers to updating your policy when needed, staying on top of what you need coverage for, and ensuring you aren’t committing insurance fraud. This is easier than you think.
What is insurance fraud?
Fraud is when you intentionally mislead your insurance company by exaggerating or falsifying a claim to your insurance company. It seems like an insignificant thing to “stretch” an existing claim, but it is a big deal, and it is, in fact, illegal. An insurance policy is a legal document, after all. So, putting in a false or exaggerated claim breaks or voids that legal document. We discussed car insurance fraud some time ago, so let’s discuss home insurance fraud.
Examples of homeowners insurance fraud
There are quite a few ways that you can commit insurance fraud. Let’s look at some of the main ones so that you know where to be especially careful when filing an insurance claim.
Padding a repair cost
If you need to put in a claim for a damaged floor after an insurable incident, you may get a repair amount of $1,650. If you ask the repair person to bump that quote to $2,000 (or you tell your insurance agent yourself that it’s $2,000), this is considered insurance fraud. You are knowingly increasing the amount of the repair to get more money from your insurance as a payout.
Overpricing a stolen item
If you have certain items in your home that are insured separately (pieces of art, for example) and they are stolen, you can put in a claim for that. If you exaggerate the value of that item, however, this is insurance fraud. You must submit a claim for the actual, fair value of the stolen item and then receive that amount in return.
Stating pre-existing damage as new damage
Let’s say you caused some damage in your living room two months ago. If you have a kitchen fire and have to submit a claim for the costs to repair it, you may try to include the past living room damage in that claim. This, too, is insurance fraud.
Should I report insurance fraud?
After reading these examples, you might realize that someone you know is committing insurance fraud. So, what now? Unfortunately, insurance fraud doesn’t just impact the person committing it. It impacts you, too. First, if that person is committing fraud on a shared policy, it can make you liable as well. It also can drive your rates up in the future if it is detected. Insurance fraud impacts everyone, and it needs to be reported to protect yourself from facing fines and jail time.
You can report insurance fraud by using the fraud hotline for your insurance provider – Farmer’s Contact page. Or you can contact Texas Department of Insurance (TDI) fraud reporting. It’s important to do as soon as possible.
Unfortunately, homeowner’s insurance fraud is a common problem, with many committing it knowingly or unknowingly. Use this as your guide to detect it and prevent it from happening in the future for your own safety, security, and peace of mind.
Should you have questions about insurance fraud or want to discuss your personal insurance coverage with us, contact Paula Smith Insurance at (281) 488-8880 today.