The Risks of Faking a Home Insurance Claim

The risks of faking a home insurance claim

The recession has certainly taken its toll on the bulk of homeowners who have been left reeling by high mortgage rates, increased utility bills and the soaring cost of living. Many, it seems, have been left so desperate by the effects of the credit crunch that they are willing to forego their morals in a bid to make some cash - even if that means breaking the law.

Research by a comparison website has revealed that one in 20 Brits would consider making a false claim on their home insurance. Of these, more than 1.2 million blame the credit crunch for their dishonesty and state that the recession has made them contemplate this route. What’s more is that a fifth of these people claim they have already got the better of their home insurance provider by making a false claim.

Is home insurance fraud a harmless crime?

Insurance companies in general don’t have an endearing image. For the most part they provide a necessary service, but one for which we won’t see any return on our premiums unless the worst happens - and even then there’s no guarantee of a payout.

As such "getting one over" on your home insurer may seem harmless enough. However, the reality is that the consequences can be far-reaching - both for you and honest policyholders.

Fabricating a claim for a payout is illegal and could lead to prosecution. You could also be placed on the CIFAS register, which will harm your chances of getting good rates on financial products in the future. What’s more is that there is an impact for other homeowners too – insurance fraud increases the cost of premiums and so chances are that even if you get away with your false claim, someone is paying for it through increased costs.

If you think the chances of being caught are slim, then think again. The majority of home insurers send out loss adjustors, particularly for large claims. They assess the claim that has been made and look for signs of fraudulent activity. They are highly experienced and if they feel a claim is not justified they can throw out your application and your insurer could even refuse to offer cover going forward.

Honesty the key for home insurance

It’s not just when making claims that honesty is vital with home insurance. It’s important to be completely upfront with your insurer from the moment you take a policy out.

It can be tempting, for example, to tell ‘white lies’ about your circumstances in an effort to keep premiums in check. For example telling an insurer that you have more security devices then are actually present at a home; exaggerating the time you spend in the property; or claiming to a have a guard dog or smoke alarms could all help you save money. However, if you are caught out then your insurer has every right to cancel your policy and charge you for the premiums you should have been paying.

Honest ways to cheap home insurance

If you’re looking to save money, then there are plenty of ways to save on home insurance without being dishonest.

First consider if you’re getting the best possible deal for the home insurance cover you’re taking out. Chances are that if you’ve stuck loyally with the same insurer for several years, you could be getting a better deal elsewhere - even if your insurer’s quote was the most competitive when you took the policy out.

To find out if you could save money, use a home insurance comparison website to compare home insurance policies. The leading websites compare deals from more than 50 providers with one search so you can get an overview of what’s available. Just remember to look beyond price and ensure you’re getting the level of cover you want for your money.

Even if you’re stuck in the middle of a home insurance contract there are still ways to save. For example, most insurers offer discounts to property owners who enhance the security of their home. Installing devices such as burglar alarms, CCTV cameras and time-switch lights could help you save - just ensure you consult your insurer about which equipment will earn the largest discounts. Protecting your home from fire damage too can also be a money saver - so look into smoke alarms and fire extinguishers.

Remember too, that making unnecessary claims can backfire. Most home insurance companies allow you to build up a no-claims discount for every year you go without making a claim - so don’t make too many small claims, particularly if you have a large excess on your policy.