Were your sunglasses stolen – or did you simply want a new pair? Did you really have quite that much jewellery stolen? Was that camera really lost? Are you sure you didn’t overinflate that home repair bill?
If you’re putting in an insurance claim these are just a few of the questions you may face. And if you’re found to have exaggerated your claim, expect to have it denied and for your insurance policy to potentially be cancelled!
“Tell the truth when making an insurance claim,” says Insurance & Financial Services Ombudsman (IFSO), Karen Stevens. “There is no doubt that insurers will check the information you give when they consider whether to accept your claim.”
There are varying degrees of dishonesty, and the law recognises a difference if someone makes a fraudulent claim, or makes false or dishonest statements in support of what would otherwise be a valid claim.
“But there’s no such thing as a ‘bit of a lie’ when it comes to insurance,” says Karen.
“False information can not only result in a declined claim, but your insurance policies can also be cancelled, and your name listed on the Insurance Claims Register (ICR). This can make it very difficult to get further insurance, which can be devastating for people – like when they’re trying to get a mortgage.”
Consider the following cases considered by the Insurance & Financial Services Ombudsman scheme…
1. Sick of your sunnies…
After a woman made a claim for a pair of lost glasses, she then admitted the glasses were simply scratched and worn, and she said they were lost to make sure she had insurance cover. All of her policies were subsequently cancelled, and details of her claim are now on the ICR.
2. Inflated invoices…
When a Christchurch homeowner admitted using false invoices about house repairs, the insurer not only declined the claim and cancelled the policy, but they recovered the payments they’d already made under the ongoing claim.
3. What’s your partner up to?
In a car insurance case, the insured’s husband tried to withdraw a claim as he had told a “bit of a lie” about being hit from behind by another car. But it was too late, and an alert was placed on the ICR against both the husband and wife, as they were joint policyholders.
4. Smile and say “cheese…”
When a homeowner made a contents claim for a stolen camera, cellphone, and jewellery, she provided photographs as proof of ownership. During the insurer’s investigation, metadata showed that the photos were taken with the allegedly stolen camera and cellphone after the date of the burglary. The entire claim was declined on the basis of fraud.
Digital ability increasing fraud
According to insurer IAG, technology is changing the way crime is committed – including insurance fraud. IAG New Zealand’s Fraud Intelligence Team has been monitoring these developments and has noted an increase in tech-savvy fraud.
“We are seeing the use of technology in fraudulent insurance claims increase, particularly in the use of online market places to facilitate fraud,” said Natasha McFlinn, IAG Fraud Intelligence Manager.
“Digitally forged documents have been around for some time but we are seeing an increase in them as people’s familiarity with digital technology increases.”
In some claims, fraudsters pretend to own items claimed for that they’ve never owned using computer technology to suggest evidence of ownership.
Meanwhile, online spaces have also become a popular destination for fraudsters.
“Through online marketplaces some fraudsters seek to obtain a second hand item cheaply and then claim they have had a brand new or higher model item stolen. Others try to sell unwanted items that they claimed were stolen and have had replaced via an insurance claim.”
People often underestimate the consequences of committing insurance fraud.
“Our team also checks for suspicious claims on ICR (the Insurance Claims Register), which is a central database that the majority of insurers load claim details into, enabling insurers to check a customer’s claims history,” said Natasha.
“If you are flagged in the ICR for fraudulent activity, it’s unlikely you’ll be able to get insurance again.”
Do you have enough insurance anyway?
Definitely don’t make a false or misleading insurance claim – but do check that you have enough insurance so that if anything does (legitimately) go wrong, you’re covered.
In terms of home insurance Treasury released a report in early May saying New Zealand households could be underinsured by up to $184 billion. Ouch!
“One really important difference, when house insurance policies changed to ‘sum insured’ after the Canterbury earthquakes, was that the responsibility immediately transferred to the homeowner. It is now up to you to make sure the amount you are insuring your house for is enough to rebuild it,” says the Insurance & Financial Services Ombudsman scheme’s Karen Stevens.
Some tips to help you check your cover are:
- Read your house insurance policy carefully to check what your current level of cover and terms and conditions are
- Check that the square meterage of your home and other buildings on your property are recorded accurately
- Check that additional features of your home have been identified – this includes fences, driveways, garages, sleep-outs, sheds, retaining walls and swimming pools
- Answer the questions on your insurance company’s online calculator
- Ask a builder or quantity surveyor for their expert advice.