Higher homeowners insurance quotes because of fraud

The National Insurance Crime Bureau tries to monitor the level of fraud across the country but it's not a police enforcement agency. It has no powers of investigation. All it can do is respond if suspicions are raised. Indeed, truth be told, no white collar crimes are considered high priority. With rising deficits both at state and federal levels, scarce money goes to investigate crimes of violence and anything affecting national security. As a nation, we can't afford to investigate all the possible cases of fraud. This leaves it to the private sector. That's how capitalism works. For now, we're all prepared to keep on paying ever higher premium rates to cover the cost of the fraud. At some point, we will complain and the insurance companies will then invest in more claims adjusters and investigators. Until then, we keep on paying. The NICB estimates the cost is between $3 and $5 billion per year. That's more than $100 dollars on everyone's premium.

This poses the question: what do people do to fake claims on their home policies? Sadly, it doesn't take much. Anyone who has gas piped into the house can have an accident causing a fire. Not all fires are insurance scams, of course. Not even some of the questionable claims are fraudulent. Sometimes home owners are naturally anxious and trigger suspicions. Sometimes insurance companies have received too many claims and refer a random selection for investigation. If nothing else, it slows down the claims process and delays payment. After all, there's been a recession followed by tough economic times. This gives everyone a motive to burn down their homes when the mortgage is too much of a strain.

From state to state, the number of suspicious claims on home policies are lower than for other types of policy, usually affecting no more than 20% of claims. But the percentage does seem to be arising. It's all a question of opportunity. When there's a serious hail storm and many properties are damaged, there's a temptation to claim for all the structural damage no matter when it was caused. Perhaps in the last century, there were more God-fearing folk around and so less dishonesty when it came to claims. Now people see an opportunity to bring in some extra cash or to solve some repair problems, and there's no hesitation. People know there's a very good chance of getting away with it.

So here's the question for you readers. Are you ever tempted? Let's say the opportunity arises and you resist, how righteous are you? Suppose you suspect your neighbor of inflating a claim. Do you tip off the insurance company? There's no reward in it for you. The CEO is not going to write out a check and a thank-you letter. But if everyone followed your example and the level of fraud dropped, the premium rate should also fall — assuming the insurance company is honest and passes on the savings. So when the homeowners insurance quotes come in and they are higher than you were expecting, do you look around your neighborhood and wonder? Informing the insurers of your suspicions might not bring you cheap homeowners insurance, but it might start improving the level of honesty around you.