Home Insurance Frauds Punishment

Everyone today gets home insurance, to save their home from financial constraints in case of an unexpected accident or mishap.

Any damages that happen to the property or the assets in the home are covered under homeowners insurance, but these are different from mortgages. The damage that is covered is interior, exterior and any injuries that occur while on the insured property.

A homeowner’s insurance is simply protection given to your property- and it works like the rest of insurances as well: pay your premiums to keep the policy in force.

But homeowner’s insurance may not be the cleanest type of insurance with the highest level of transparency, there are a lot of frauds that happen which you, as a client shouldn’t be doing. Many people commit frauds into faking accidents so that insurance companies pay them. But people should also know that these types of acts are punishable by law.

Let’s get into more details about home insurance frauds and their punishment.

Types of Insurance Frauds

This is a list of some of the fraudulent insurance claims that are committed by homeowners.

• False Claims: Many homeowners try to stage accidents and fake them when they didn’t even happen. Damaging their property themselves or hiring someone else to do it so that they are able to make a claim.
• Exaggeration: This is often done if an area is affected by natural disaster like a flood or an earthquake. The affected region will have homeowners filing for a genuine claim, so this gives an opportunity to people to self-damage their property and ask money on the basis of such natural hazards. When there are so many people filing for claims, the insurance company may not have enough representatives to go and personally investigate the cause of damage- thus many people may get what they want.
• Overstating the value: For instance if there has been a burglary in the house, people can overstate the monetary value of some of their important assets lost like laptops or TV. Or even if you ask the repair person or handyman to make a higher bill for the work they’ve done, this is also insurance fraud. People do this to gather larger claims on the insurance money.
• Dishonesty: If you knowingly provide improper information to the insurance company, or submit somebody else’s insurance receipt with the attempt of getting a bigger claim, you’re not only being dishonest to yourself but also the insurance company.

Examples of Insurance Fraud: How People Misrepresent Claims

Imagine you experience a burglary where you lose a laptop and a TV. When listing items for your insurance claim, you exaggerate, adding items like gold jewelry and an expensive watch that you don’t actually own.

Rather than accurately reporting a $500 laptop, you inflate the value to $600 when filing your claim, attempting to deceive your insurance provider.

Similarly, if your wall sustained damage last year and your roof suffers a flood this year, you falsely attribute all damages to the flood, seeking compensation for losses unrelated to the current incident.

How to report Insurance Frauds?

If you ever see an insurance fraud happening in your neighborhood or your area, it is your responsibility as a citizen to report it.

If you’re a citizen and witness any fraudulent activity, you can lodge a complaint and report it via:

Internet: There are many websites and apps on the internet that take notice of fraudulent activity, all you have to do is fill out an application. Some websites also help you report it anonymously so it’s not a problem for people willing to hide their identity.

You can report it online on: National Insurance Crime Bureau or Insurance Fraud Bureau.

Phone: You can call on hotline numbers 800.835.6422 or  (888) 372-8369 from Monday to Friday.

Mail or Fax: You can print your fraud application and send it via mail to:

New York State Department of Financial Services

Insurance Frauds Bureau

One State Street, New York, NY 10004

Or fax it to (212) 709-3555.

Home Insurance Frauds Punishment

If you’re ever caught committing fraudulent activity, the local government punishment is really severe. The fine can be charged for up to $50,000 and can even exceed depending upon the severity of the case. But under federal law the punishment is more lethal, it could round up to $250,000 per incident.

The defendant is also likely to serve up to 5 years in prison.

A soft fraud is usually considered conscious misdemeanour, and the punishment is usually a short time in jail or a fine amount. A hard fraud is considered a major felony in the eyes of the law. The punishment is obviously stricter, with more years in State prison and a very high amount of fine.

Moreover, once such fraud is written on your record and profile, it lowers your credit score. You might never be allowed to claim any type of insurance again.

Conclusion

Insurance fraud carries severe legal consequences, including imprisonment and substantial fines for offenders. If you witness fraudulent activity, it’s crucial to report it to the authorities to ensure justice is served.

Taking action against fraud is pivotal in maintaining integrity within the insurance industry and upholding legal standards. By reporting suspicious activities promptly, you contribute to deterring future fraudulent acts.

Each individual’s commitment to honesty and legality plays a significant role in safeguarding against fraudulent practices. Upholding ethical standards ensures a fair and just society for all.

Remember, every effort counts in combating illegal activities. Stay vigilant and proactive in promoting lawful conduct.

By following these principles, you contribute to a safer and more trustworthy insurance environment. Your actions can make a positive impact in preventing fraud and upholding justice.

Let’s work together to uphold integrity and legality in insurance practices. Your vigilance matters—report fraud to protect honest policyholders and maintain trust in the insurance system.