This type of fraud takes place when someone knowingly submits an inflated claim on their homeowners or renters’ policy for more than the actual value of the loss or damage. Submitting a false or misleading claim to receive undeserved compensation is also considered homeowners fraud.
The most common types of homeowners insurance fraud in Pennsylvania involve:
- overstating the value of stolen items in a burglary of a home or vehicle
- lying about the extent‚ cause‚ date or location of damage
- intentionally damaging property to make a claim
- staging a phony burglary or vehicle break–in and faking the theft or damage
of property
- asking a repairman to "cover the deductible" by increasing their estimate or bill
- fabricating supporting evidence‚ such as repair bills or receipts‚ often in collusion with a crooked contractor‚ plumber‚ repairman or insurance adjuster
- concealing that a residence is used as a rental or in a commercial business
EXAMPLES
Here are a few typical scenarios to illustrate some of the different ways homeowners insurance fraud can be committed:
A strong storm blew the shingles off of John’s house. When the insurance adjuster inspected the roof, John also said some siding was damaged during the storm, even though the siding had been damaged when John bought
the house.
During a trip to Philadelphia, Rebecca’s car was broken into. Her motor vehicle insurance paid to fix the damage done to the car. On her homeowners insurance claim, she said the items she lost were a lot nicer than they really were — a leather coat instead of a denim jacket — and she added a few extra items to the list she gave to her homeowners insurance company.
Zeke’s big screen TV quit working, then his home was struck by lightning. He told his insurance company the TV had been damaged by the electrical storm.
To view a TV spot from the prevention campaign that addresses the issue of homeowners insurance fraud‚ click here.
To listen to a radio spot from the prevention campaign that addresses the issue of homeowners insurance fraud‚ click here.
To view the billboard from the prevention campaign that addresses the issue of homeowners insurance fraud‚ click here.
To download a brochure from the prevention campaign that explains the issue of homeowners insurance fraud, click here.
ACTUAL CASES
Unfortunately‚ scenarios of homeowners insurance fraud are played out all too frequently in Pennsylvania. In 2008 alone‚ more than 200 complaints were received about suspected fraud. The following cases show how this crime is committed – and prosecuted – in real life.
POLICE MAKE ARRESTS IN FIRE AT HOME
Two arrested on accusations they purposely set fire to their home.
Saturday, August 16, 2008
Donner VonRitter and Daniel J. Potter were arrested on accusations they purposely set fire to VonRitter's home, where both men were residing.
Investigators were suspicious from the day after the fire due to VonRitter's conflicting statements. When police investigated further, it was discovered VonRitter was behind on his mortgage payments.
Erie police Lt. John McCall charged the men with two counts of criminal conspiracy, two counts of arson and one count each of insurance fraud and theft by deception. After the fire, VonRitter collected $120,000 from Erie Insurance as settlement.
County records indicate the home was deeded to VonRitter by his wife's family. She died in 2005. Investigators found the most recent letter to VonRitter from the mortgage company was dated five days before the fire. "The letters were from Flagstar Bank and indicated they were trying to contact VonRitter for the purpose of receiving payment for the mortgage of the house," the complaint says.
DIM-WITTED CRIMINAL COULDN’T FOOL METLIFE
A York County woman thought she could dupe both the law and MetLife P&C Insurance Company. She was wrong.
Wednesday, January 2, 2008
Mary Brabham had filed a claim that someone had broken into her home and stole all kinds of expensive items, such as televisions, other electronics, jewelry and clothing. Naturally, MetLife asked her to submit receipts for the nearly $13,500 worth of stolen property to prove that the items were purchased by her.
It wasn’t tough for the MetLife representative to notice many of the receipts and documentation submitted by Brabham appeared to be altered or bogus. There were no detailed descriptions on the jewelry appraisals and spelling was incorrect. Brabham also wrote over another person’s name on the receipts and tore off the tops of certain receipts. Very tricky!
After an investigation, it turns out that many of the items claimed were never purchased by her. Also, a neighbor told police that the woman had moved out of the address where the burglary allegedly occurred approximately two to four weeks prior. Brabham failed to respond to MetLife regarding an Examination Under Oath, and the claim was denied.
She was sentenced to two years probation and 50 hours community service, and was fined $500.
BURNING DOWN THE HOUSE
A former Philadelphia-area antiques dealer found himself in hot water when investigators found some inconsistencies after a fire ravaged his home.
Friday, February 10, 2006
Authorities held Steven J. Menasion, 45, of Nottingham, on charges of arson and insurance fraud. Police said the charges surfaced during an investigation by Menasion’s insurance company, which paid Menasion $261,000 after fire consumed his residence on Feb. 10, 2001 – a blaze that required more than 25 firefighters to extinguish.
Investigators said the destroyed items detailed in Menasion’s insurance claim did not match with the charred remains at his home. For example, screws, nails or bolts from the $3,000 dining room set would have survived the blaze, and $700 worth of pots and pans would not have vanished without a trace, police said.
Menasion, formerly affiliated with Wyeth Country Antiques and Collectibles in Chadds Ford, pleaded guilty in March to burglary and criminal conspiracy and was sentenced to 26 to 52 months in prison.
CONSEQUENCES
According to the Insurance Information Institute‚ fraudulent property and casualty claims on homeowners insurance policies cost insurers about $30 billion annually.
This is why homeowners insurance fraud is such a serious crime. As with all other types of insurance fraud‚ Pennsylvania considers it a felony. Violators can spend up to seven years in prison and spend up to $15‚000 in fines. There are also many other associated expenses such as court costs and legal fees. Plus‚ those found guilty of insurance fraud have the stigmas and limitations of being a convicted felon to carry with them for life.
PREVENTION
There are simple ways to avoid facing situations where there’s an opportunity for you to commit homeowners insurance fraud.
First‚ it is important to make sure your homeowners insurance policy is up–to–date. Second‚ you need to understand your policy‚ what is and isn’t covered‚ and under what circumstances. Your insurance agent can help you with these.
Learning all you can about homeowners insurance fraud will help you avoid costly and life–changing mistakes. And in all aspects of your dealings with insurance companies – from applications to claims – make sure the information you provide is truthful and accurate.
To help all Pennsylvanians better understand homeowners and other types of insurance fraud‚ the Pennsylvania Insurance Fraud Prevention Authority (IFPA) has embarked on an informative and aggressive statewide public education and prevention campaign.
Click here to learn more about the IFPA Prevention Campaign.