Homeowners Insurance Fraud

Homeowners insurance fraud is a serious offense that is responsible for the increasing rates that many homeowners face when they apply for coverage. Individuals who commit homeowners insurance fraud are making an effort to make money off of their provider, and are doing so by illegal means. This offense causes trouble not only for the individual who commits the fraud, but also for the providers and all other who want to purchase homeowners insurance. Thanks to the actions of those who commit homeowners insurance fraud, others have to pay for it.

The Offense

Insurance fraud occurs whenever a policyholder intentionally submits, to his or her provider, a completely false claim or is dishonest regarding a loss under their policy that is for a greater amount than the actual loss. Under the law, it is a crime to use false or misleading information to support claims like this. Doing so is considered homeowners insurance fraud. Some ways that individuals succeed in committing this act are by: submitting fake receipts for household items or repairs made to the home, submitting fake home improvement estimates, and submitting photographs that have been edited as evidence in a homeowners claim.

It is important for owners to know that no matter the insurance company does in terms of fulfilling the claim or not, simply participating in these actions is illegal and can have serious consequences including homeowners coverage cancellation. First and foremost, an individual will most likely lose his or her policy if homeowners insurance fraud is committed. This could cause the homeowner a great deal of trouble, as it would leave his or her home unprotected, and it may make it extremely difficult for the homeowner to get insurance coverage in the future. Other companies are not going to want to insure someone who has committed illegal acts, and even if a company agrees to insure such a person, the quotes he or she receives are likely to be exorbitant. In addition to these consequences, persons who commit homeowners insurance fraud can face legal action. Punishment for committing this act can be severe and can include heavy fines and even jail time. As such, this is a serious offense that should not be taken lightly. All offenders should be punished heavily for committing this kind of fraud.

Other Consequences

Individuals who commit homeowners insurance fraud may believe that the only one they are ripping off is a giant insurance company. However, this couldn’t be further from the truth. Those who commit fraud are also ripping off all other customers who want to purchase homeowners insurance. Purchasing a home is expensive on its own, and securing a good homeowners policy can also be costly. Every time a person commits this kind of fraud, it causes the rates on these policies to go up for everyone. Providers have to make up for the money they lose in these kinds of claims, and the only way to do it is to increase the rates across the board. As such, all those who wish to secure a policy are forced to pay for the mistakes of criminals.

Homeowners fraud can also have significant effects on the way that claims are processed. Due to the rise of fraudulent activity, many companies are now requiring customers to go through a more rigorous claims process. A more rigorous process for claims means several things. First, it means that getting a claim processed could take a longer amount of time. This could seriously inconvenience some owners who have real damages to their homes that need to fixed. In addition, a more rigorous claims process means that more money will have to be spent on going through each hazard protection application. The more time individuals at the provider’s office spend trying to discern if your home was really damaged in a flood or fire, the more money it’s going to cost you and everyone else in the end. Finally, a more rigorous claims process can ultimately lead to some legitimate claims being denied. If providers become this harsh, then this is going to discourage customers and it may cause uneasy relations between them and providers. Overall, a more rigorous claims process does not mean anything good for policyholders or for the providers themselves.

As you can see, homeowners insurance fraud does little more than create an expensive mess for everyone involved in the process. While providers do need to be strict when it comes to those who commit the acts, it’s unfortunate that everyone else has to suffer. To do your part to help combat homeowners insurance fraud, make sure that you are completely honest about all of the claims you make on your policy. You can’t control the actions of others, but you can control yours.

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