Home insurance fraud has become a prevalent problem in Florida, especially in recent years. According to industry estimates, property/casualty insurance fraud amounts to more than $30 billion a year nationwide – a hefty price tag that gets passed on to homeowners.
Insurance fraudsters come in all shapes and sizes: experienced criminals who steal large amounts of money through business scams and insurance claim mills … general contracting and repair companies that inflate bids and charge for unnecessary services … policyholders who want to cover their deductible or make some extra cash.
Types of Insurance Fraud
Some perpetrators of fraud strategically stage a home accident, such as a fire or flood, and then file a claim for the extensive damages. The bad news for them is that these highly planned schemes have become fairly easy to spot and may result in arrests and jail time.
For example, 31 Miami-Dade residents were arrested in May 2015 for staging 20 fires and five floods between 2011 and 2013, all part of a joint scheme to defraud insurance companies. In September 2015, a resident of the Florida Panhandle town of Milton was charged for allegedly attempting to burn down his home and causing almost $200,000 in damage. If convicted, he could face up to 20 years in prison.
Unfortunately, these staged accidents don’t just affect the culprits. They also cost Florida homeowners and insurance companies. “Scams like these play a huge role in our exploding homeowners’ insurance rates,” says Miami-Dade State Attorney Katherine Fernandez Rundle.
The most common culprits of insurance fraud are “fibbers” who exaggerate legitimate claims to cover their deductible. While some may consider this to be no big deal, the inflated claims quickly add up, forcing insurers to increase policy rates on everyone else to cover the difference.
Exaggerated claims are usually conducted in one of three ways:
- Adding items to a claim that do not actually exist.
- Boosting the value of an item that was damaged or stolen.
- Changing the age of an item to compensate for depreciation.
How to Spot the Scam
In today’s tech-savvy world, insurance companies have access to sophisticated methods to detect fraud, making it easier than ever to spot red flags.
Inspecting Claims History
Insurers and law enforcement often review new claims to determine if someone has filed several claims in the past. Previous claims made in large groups or similar types of losses can present a red flag. While checking a policyholder’s claim history doesn’t directly detect fraud, it may indicate that further investigation is necessary.
Data Analysis and Cross Checking
Insurers often use extremely complex computer systems and data analysis programs to help organize and streamline the claims process to help policyholders quickly get back to normal in the event of a loss.
These data management programs also allow insurers to cross-check claim information and pinpoint any suspicious patterns that may indicate attempted fraud. If something looks out of place, they often send a representative to check on the home for verification.
A few cross-checking red flags include (but are not limited to):
- The same policyholder receives multiple checks;
- Several claim payments have been made out to the same address; and/or
- A policyholder claims their home was damaged by a storm, but the weather report indicated clear skies that day.
Social Media Listening
Social media is a great tool for detecting potential insurance fraud. What some users post on Facebook and Twitter would surprise you! These sites give many users a sense of anonymity, which makes them feel like they can post just about anything.
Through “social media listening,” law enforcement can scan social networks to look for clues surrounding claims that may be fraudulent.
Our Better Way of Protecting Against Fraud
People’s Trust actively reviews claims to weed out fraud so we can continue to deliver more competitive rates and a better customer experience.
We deliver simplified recovery to our policyholders, getting homes and lives back to normal, fast. We have an affiliated company that serves only our policyholders, allowing our restoration experts to respond to our customers’ needs with just one phone call.
With more than 300 employees, the Rapid Response Team is Florida’s largest insurance restoration contractor. Besides storm recovery, the Rapid Response Team will respond to any home emergency, from water damage to smoke to mold, and they will provide outstanding repairs for almost any everyday claim with an unparalleled 3-year, 100% customer satisfaction guarantee.
We use quality supplies and materials, and the work isn’t done until we meet or exceed our policyholders’ expectations and restore their homes to pre-loss condition or better.
This solution to the problem of home insurance fraud is at the heart of the People’s Trust brand promise – better upfront preparation, simplified recovery for our customers and a better overall value, measured by saving both money and time. It’s what we call Simply A Better Way.