Your homeowners insurance policy is a binding legal contract. It clearly outlines your rights and responsibilities, as well as those of your insurance company. Take time to review your policy and make sure you understand what is and is not covered. If you have any questions about your coverage or how your policy works, contact your local insurance agent for clarification.
Insurance fraud occurs when an individual or group knowingly seeks to obtain money or other benefits from an insurance transaction through deception which violates the insurance contract. Activities such as intentionally causing an auto accident or exaggerating or falsifying a loss or damage to property are common examples of insurance fraud and can affect individuals either as a victim or an unwitting participant. Insurance fraud can be dangerous not only to innocent bystanders but also to the person committing the fraud. It also contributes to higher insurance premiums for all policyholders. When people file false insurance claims, they are stealing not only from their insurance companies but from their friends and neighbors as well.
According to The Virginia State Police Insurance Fraud Program, Stamp Out Fraud (opens in a new window), fraudulent insurance claims in Virginia exceed $20 million each year, and millions more in fraudulent claims are attempted. Insurance fraud is estimated to add as much as $1,000 to the cost of goods and services and is costing the average Virginia family $1,000 each year.
This type of property fraud occurs when a policyholder intentionally overstates or fabricates a loss or damage to their home or personal property in order to receive payment they are not entitled to. This may include activities such as arson, fake burglary, or falsely reporting pre-existing damage.
Casualty fraud involves intentionally misleading an insurance company to obtain liability coverage payment for accidents, injuries, or property damage by staging or exaggerating a claim. Examples include faking or overstating an injury after an alleged slip-and-fall in a store or other place of business or misrepresenting incidents to get payouts for things not covered or for more than the actual loss.
Insurance fraud using vehicles is the most common type of fraud in Virginia. Taking the form of property or casualty fraud, it can involve a person damaging their own vehicle, scammers staging a crash, and making false claims about car accidents or accident-related injuries. It can even involve mechanics overcharging for or lying about repairs for financial gain.
If you knowingly deceive an insurance company in order to obtain money or other benefits, you may be charged with insurance fraud. When the value involved is less than $1,000, the offense is a Class 1 misdemeanor, punishable by up to 12 months in jail, a fine of up to $2,500, or both. When the value is $1,000 or more, the offense is a Class 4 felony, which can carry a prison sentence of up to 20 years, a fine of up to $2,500, or both imprisonment and a fine.
Taking careful, honest steps when you file an insurance claim can help you avoid the serious legal and financial consequences of insurance fraud. It can be tempting to stretch the truth when filing a homeowners insurance claim, especially after a stressful event like a hurricane. However, even seemingly small exaggerations can lead to serious legal and financial consequences. When reporting a loss, accurately document the value of any damaged or stolen items and only include damages that directly resulted from the specific incident you are reporting. If an injury results in an insurance claim, do not fake or exaggerate an injury or accident.
Avoid using door-to-door solicitors or "storm chasers," especially after a major weather event causes heavy property damage in a concentrated area. Homeowners may be shaken and vulnerable and in need of urgent repairs. Some of these contractors may not be reputable. They might pressure you for payment upfront and then fail to complete the work, or they may perform substandard repairs that create more serious problems in the future. This is especially common in the home roofing repair industry because damage may be difficult for you to see and a roof is a big-ticket item to replace.
Some dishonest collision repair shops may include charges for work they never intend to complete or for parts that will never be installed. They may also inflate an estimate by overstating the extent of the damage to the vehicle.
To avoid becoming a victim of auto insurance fraud, be careful not to tailgate—following too closely could set you up for a staged accident. What you do immediately following a car accident is extremely important too.
Here are a few more precautions to avoid a car insurance scam:
Driving down fraud by reporting what you see or hear reduces annual premium rates for policyholders everywhere and protects others from falling victim to the same schemes. If you suspect insurance fraud, it's important to tell authorities like the Virginia State Police Insurance Fraud Program or the National Insurance Crime Bureau (NICB) (opens in a new window). You can even remain anonymous and report a tip (opens in a new window). You can also report suspected fraud to your insurance carrier or insurance agent.
Resources:
https://stampoutfraud.com/annual-reports/
https://law.lis.virginia.gov/vacodefull/title18.2/chapter6/
THE NORTHERN NECK INSURANCE INTEGRITY PROMISE — We pledge to provide straight talk and good counsel from our NNINS Virginia insurance experts through our blog. While we hope you find this to be a helpful source of information, it does not replace the guidance of a licensed insurance professional, nor does it modify the terms of your Northern Neck Insurance policy in any way. All insurance products are governed by the terms in the applicable insurance policy.