Image Courtesy of james.thompson
During these tough economic times it can be tempting to take any opportunity to make a quick buck, however, committing home contents insurance fraud could end up costing you more than you think.
In a recent survey of UK householders it has become apparent that more householders than ever before would take the risk and attempt to commit fraud by claiming on their home contents insurance for items they never had, or exaggerating damage, values or other particulars to claim more than they really should.
The research has shown that 2.4 million of us Brits would consider falsely claiming, which adds up to around 6% of the population. This contrasts starkly with the 5% who would have considered it a year ago, meaning a further half a million householders would consider making a fake claim in order to line their pockets with insurance company’s money.
Furthermore, the survey showed that almost half a million households have already made a false claim and have been successful in obtaining fraudulent pay outs from their insurers.
Examples of the types of claim people try to submit include claiming for a modern, flat panel TV when the one they lost in the burglary or fire was actually a cheap old CRT. Fake break ins have been reportedly conducted, where a crime reference number and broken door lock open the flood gates for claims on home contents insurance for high value electrical items, jewellery and all manner of other belongings. If you think you need home contents cover click here.
Householders who have taken out accidental damage cover have been known to purposefully damage their items in order to obtain a new for old replacement whereas people who have belongings covered away from their home have reported watches, phones and laptops stolen which are actually still in their possession.
Whilst insurance companies are there to help us in our times of need, they are also wise to many of these tricks. Householders trying to claim for high value items are often asked to produce receipts or valuations certificates to prove ownership and the rules on this are getting tighter by the day. This has a negative impact on those of us trying to make a genuine claim and means everyone needs to be more meticulous when it comes to keeping receipts for their purchases.
For the people making fake claims it can seem like a win-win situation, with no particular victim. However, it is actually the nation that pays for the losses the insurance companies suffer. It is estimated that each year fake claims and exaggerated claims account for around 5% of all home contents insurance claims and that it costs the industry more than £1.6 billion each year.
But these losses are not just swallowed by the insurers. They are passed back to policyholders as additions onto their premiums. It is estimated that last year every home contents insurance policy included around £44 of additional charges as a direct result of insurance fraud.
Insurance fraud is a serious offence and can lead to prosecution if the insurance company catches you. As well as the more stringent processes householders have to go through to make a claim, insurers are also utilising the latest technology to detect fraud and are willing to throw the book at claimants who are caught.
Voice analysis technology is being used in many insurance call centres, where incoming calls are routed through computers which detect stress levels in the voice, an early indication of a person who is lying. The use of this and other tools has seen the detection rate rise by around 25% in the past three years.
Claimants who are detected to be making an exaggerated or false claim on their home contents insurance face the prospect of having the entire claim refused, including any genuine items which were being claimed for. Added to this they could be refused insurance by this company and even by others if their details are added to the insurer’s database. Police may be informed and criminal charges can be brought.
In the best case scenario, claiming on home contents insurance when it is not strictly necessary can lead to inflated premiums and sky high excesses later on. In these times of recession this is not a quick fix that should be considered by any householder.
