Though you may not ever commit it yourself, insurance fraud is still something every homeowner in Canada should be aware of. This is due to the fact that it translates directly to higher premiums for everyone. In fact, insurance fraud costs Ontario billions of dollars per year. It should go without saying that home insurance fraud is a serious crime that comes with hefty penalties. So, it is important to be aware of what insurance fraud is, how to recognize it, and how to keep yourself protected. Luckily for you, isure has everything you need to know when it comes to home insurance fraud.
What exactly is this type of fraud?
Home insurance fraud happens when a person deceives an insurer in order to profit financially. However, this is not always intentional. You can still be guilty of it even if you don’t mean to commit fraud. In many cases, people who commit home insurance fraud are not even aware they’re doing so. Being able to spot home insurance fraud in order to prevent and report it is crucial for a homeowner. In order to properly do this, you must do your part as a homeowner by familiarizing yourself with the different types of home insurance fraud methods.
What are the types of home insurance fraud?
There are three major types of home insurance fraud. These include exaggerated claims, restoration fraud, and title fraud. Title fraud is a specific type of identity theft, and with the internet growing every day, this type of fraud is becoming easier. Understanding each type is crucial to avoid accidentally committing insurance fraud, as well as spotting its potential.
1. Exaggerated claims
Everyone knows that home insurance has never been meant as a source of profit for homeowners. However, profit is generally the main reason people tend to commit home insurance fraud. The most common act of doing this is by making an exaggerated claim. Home insurance’s purpose is to cover your home and the contents within it. When your home or its contents are damaged in the event of a fire or flood, you can file a claim to recuperate any losses or damages to your home or items. Of course, when this happens, your insurer will need to review the damages done in order to properly compensate you.
This is where insurance fraud can come into play. Fraudsters can request a price that is beyond the actual retail value of an item that is damaged or stolen. An example of this can be if your camera is stolen. By requesting an amount that is much higher than the actual value of the camera, you are attempting to partake in fraud. Another example of this is providing an insurer with a receipt of a stolen item that the fraudster actually owned in the first place. This can include items such as video game consoles, laptops, or flat-screen televisions.
There are many consequences that come with submitting an exaggerated claim. Not only do you jeopardize any legitimate coverage you own, but you risk having losses that actually occurred no longer reimbursed. This will also result in the fraudster having a difficult time making legitimate claims in the future. As with all types of insurance fraud, submitting an exaggerated home insurance claim is a crime and may involve the police after further investigation.
2. Restoration fraud
In the event your home gets damaged, you generally will inquire with your provider to pay for contractors to repair any damages. This is where restoration fraud becomes something you should be aware of. In some cases, vendors may overbill for the job under the assumption that your insurance provider will pay the full amount. In order to properly avoid this, you should inquire with your insurance company regarding their list of preferred contractors. This will make sure you are working with someone who is legitimate. According to the Canadian Home Builders Association (CHBA), you should thoroughly inspect any workers you hire to work on your home when it comes to protecting yourself against restoration fraud. You can do this by making sure they have multiple references. This can be from your insurance provider or through friends and family members who have used them before.
On top of this, it is important to make sure you do not pay upfront in full or in cash. In many cases, these fraudsters will try and scope out whether you lack knowledge regarding the specific repairs being made. To prevent this, properly understanding what needs to be done in order to repair your home is crucial in avoiding home insurance fraud.
3. Title theft
Title theft is arguably the oldest type of insurance fraud, and shares many characteristics with identity theft. There are a few types of title theft that you want to look out for the most:
- Fraudsters steal your identity and sell your home without your permission. This is the most common and arguably the scariest. Luckily, most insurance policies may provide you with coverage for identity theft. If you’re uncertain as to whether or not yours does, it is best to ask your isure broker about the specifics of your policy.
- Forging documents. The fraudster forges documents so they can re-mortgage or refinance your home.
- The fraudster performs value fraud. This happens when a homeowner misleads a lender into believing a home is worth more than it actually is. This usually happens when expensive problems are kept hidden from the insurance provider.
Title fraud can be scary, unsettling, and stressful for unsuspecting homeowners. Until your situation is fixed, you will be unable to sell or mortgage your home. Generally, victims of title fraud spend a great deal of money getting their fraud resolved. This is even the case when they have identity theft coverage, so make sure you are diligent when it comes to insurance claims and proper coverage.
Reporting home insurance fraud
When it comes to putting an end to insurance fraud, homeowners must know how to properly report it if they witness it or are aware of it occurring. You can report home insurance fraud by contacting your local police department and filing a complaint. Furthermore, you can contact the Canadian Anti-Fraud Centre as well as the Insurance Bureau of Canada. At the end of the day, insurance fraud ends up costing everyone more money through higher premiums. Whether it’s a homeowner making exaggerated claims or a worker billing homeowners higher for repairs and restorations, insurance fraud is something that can only be prevented by reporting it. As a homeowner, it is important to do your part in reporting insurance fraud when you witness it.
It’s also important to make sure you have proper insurance in order to prevent home insurance fraud from happening and save yourself money. Contact your isure broker or request a quote today.