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Insurance Fraud?
Old 04-15-2010, 09:32 AM   #1
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Insurance Fraud?

I need a new roof to sell my house so that I can retire. Its just old, 24 years old and has some leaks that show up in the upstairs of my bi-level house.

I asked for an estimate from this dude who said he mostly does insurance work. He wanted to know what my deductible was and offered to meet with my insurance claim adjuster. He didn't think that I could get a claim on the roof cause it was just worn out, but he though I could for the water spots damage. And then he said that I could fix the water spot damage myself(which I can without even thinking about it since I have already build a whole house from scratch) and pocket the money, or give it to him to drive down the price of the roof to me.

This has the ring of insurance fraud, particularly with his wanting to meeting with my insurance adjuster and take care of all the paperwork.

Is there possible fraud for me here?

Z
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Old 04-15-2010, 09:42 AM   #2
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I think you've answered your own question. I wouldn't do it.
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Old 04-15-2010, 10:53 AM   #3
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How is it fraud? The insurance either covers water damage or it doesnt. If it does, why cant you collect and pay whoever you want (yourself) to fix it?
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Old 04-15-2010, 10:57 AM   #4
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Unless I'm missing something, I don't see how this is fraud. People get insurance checks for fender-benders all the time and pocket the money if it doesn't impact how the car runs. This doesn't seem any different to me. As far as I know, receiving money on a claim based on an estimate doesn't require that you have the estimating company do the work for the price of the insurance money.
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Old 04-15-2010, 11:02 AM   #5
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Unless I'm missing something, I don't see how this is fraud.
+1
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Old 04-15-2010, 11:09 AM   #6
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One other thing to consider, though, particularly if you're preparing a property for sale is that the future homeowner will need to secure insurance (and if the property is to be mortgaged, you won't even be able to close escrow until insurance is obtained), and the existence of prior claims can impact insurability of a home (and what the premiums may be). Now one minor claim for a roof problem that's been fully replaced isn't likely to be a problem, but if you made multiple claims in a fairly short time period, it could be.

Frankly, if we're talking about a fairly small amount of money, I wouldn't bother with the claim if I'd be selling soon -- not because it's fraudulent but because I'd rather have a clean CLUE report when the potential buyer is in the process of obtaining insurance.
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Old 04-15-2010, 11:15 AM   #7
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An insurance claim for water damage when you intend to sell.... I wouldn't do it as it can be a deal killer. People are so afraid of mold.

Just replace the roof.
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Old 04-15-2010, 11:18 AM   #8
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Is it possible you might see your rates go up or your insurance cancelled if you put in a claim? Do you have a low deductible (ours is probably too high to be able to claim this anyway)?

Also is it a little weird that the roofer wants to meet with the adjuster?
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Old 04-15-2010, 11:18 AM   #9
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I just spoke to my agent. Yes it could be fraud.

Insurance is for sudden events not wear and tear. My roof is 24 years old. It has leaks and has been leaking here and there for about 7 years. The roof ridge has one of those air open things, and rain driving sideways, or snow blowing, blows right in and causes leaks. That's not an insurance issue unless a huge event takes place and a large part of the ceiling is ruined.

1. If the contractor talks to the adjuster and tells him that the water spots are from a recent storm when in fact they are not, but a result of wear, that could be fraud.

2. If the contractor talks to the adjuster without me there, it might be fraud.

3. The adjuster is supposed to talk to me not some contractor.

4. If I get the money for it, I can chose any way I want to use the money. How I use the money is not fraud, but if I get it under circumstances that caused me to lie to get it, that is fraud.

5. The agent said the adjustor would want to meet with me, and should want to meet with me, and that meeting the contractor without me, might constitute fraud if we sign a paper saying that the contractor is representing us, and he lies. He won't be liable for his lies, but we will.

Bottom line is that if I know its not an event, but simply a worn out roof( and it didn't leak early one), and I try to get money for it either me or the contractor when i know its not a sudden event, then its fraud.

Z
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Old 04-15-2010, 11:22 AM   #10
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I just spoke to my agent. Yes it could be fraud
Maybe, maybe not -- but insurance companies have a vested interest in not wanting to pay out, so there's a grain of salt. As always, the fine print in the policy would probably be the determining factor.

Having said that, even if it is legitimate, I doubt it's worth having this claim on record if you're preparing the house for sale. How much would you even get back after the deductible? I'm guessing no more than a few hundred dollars, and that's not enough (IMO) to be worth complicating a potential sale.
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Old 04-15-2010, 11:28 AM   #11
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You guys(AND GALS) are wonderful.

I would never have thought of the effect of an insurance claim on a sale of the house. I didn't even know something like that existed. I sure didn't check it when I bought my most recent house, and neither the home checker dude, nor my very knowledgeable broker mentioned it.

z
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Old 04-15-2010, 12:35 PM   #12
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Your original post didnt mention anything about water damage occurring over time. You just said you had a worn out roof and some water spots. I thought the water damage just recently occurred because of the worn out roof, which is why I said the policy either covers water damage or it doesnt. Obvously if the water spots occurred over time and you (or the roofer with your knowledge) tells the insurance company they just happened over the weekend, thats fraud. Lying to get money never a good thing.
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Old 04-15-2010, 12:46 PM   #13
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A company came through several years ago convincing people, me included, that a recent hail storm had damaged our roofs. It looked okay to me, but the guy pointed out things that he said were indicative of damage, Then he said "it won't cost you a thing and I do all the paperwork for you."

The down side is that the next year my homeowners insurance was jacked up considerably - no doubt because of the claim on the roof. So I had to change companies, which was a mild PITA, but I got a better deal on the insurance with the new company and the new roof helped lower the price.
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Old 04-15-2010, 02:03 PM   #14
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As far as I know, receiving money on a claim based on an estimate doesn't require that you have the estimating company do the work for the price of the insurance money
Actually Zig, that varies from insurance company to insurance company. There are some that will only pay the people doing the work directly.
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Old 04-15-2010, 02:06 PM   #15
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Originally Posted by Zarathu View Post
I just spoke to my agent. Yes it could be fraud.

Insurance is for sudden events not wear and tear. My roof is 24 years old. It has leaks and has been leaking here and there for about 7 years. The roof ridge has one of those air open things, and rain driving sideways, or snow blowing, blows right in and causes leaks. That's not an insurance issue unless a huge event takes place and a large part of the ceiling is ruined.

1. If the contractor talks to the adjuster and tells him that the water spots are from a recent storm when in fact they are not, but a result of wear, that could be fraud.

2. If the contractor talks to the adjuster without me there, it might be fraud.

3. The adjuster is supposed to talk to me not some contractor.

4. If I get the money for it, I can chose any way I want to use the money. How I use the money is not fraud, but if I get it under circumstances that caused me to lie to get it, that is fraud.

5. The agent said the adjustor would want to meet with me, and should want to meet with me, and that meeting the contractor without me, might constitute fraud if we sign a paper saying that the contractor is representing us, and he lies. He won't be liable for his lies, but we will.

Bottom line is that if I know its not an event, but simply a worn out roof( and it didn't leak early one), and I try to get money for it either me or the contractor when i know its not a sudden event, then its fraud.

Z
In other words, your question really turns out to be "if I lie to my insurance company, is it fraud?" And I guess I'd answer that as why yes, yes it is. If you lie to your insurance company it is fraud.
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Old 04-15-2010, 02:10 PM   #16
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In other words, your question really turns out to be "if I lie to my insurance company, is it fraud?" And I guess I'd answer that as why yes, yes it is. If you lie to your insurance company it is fraud.
Yeah -- it was only in the subsequent clarification that it was clear it would be an outright lie and therefore fraud.
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Old 04-15-2010, 04:17 PM   #17
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Well, I was never planning on lying to the insurance company at all. That's why I called my agent and explained the whole situation to him. I thought that it looked like the contractor was encouraging me to commit insurance fraud to get a reduction on the bill. I actually got the estimate today, and he's padded it with all kinds of stuff that he can sell for an outrageous amount but he can get for real cheap.

Not happy.
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Old 04-15-2010, 04:54 PM   #18
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A roofer who would propose such a deal would cheat you too. Find a good, honest, roofer.
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