Is this insurance fraud?

[satre51]

What is the name of your state? TN
My home insurance paid a "cash value" portion of a claim of interior drywall damage due to a storm. If I replace the drywall in 2 rooms, I can submit the invoice from my contractor and the insurance will pay the remaining "depreciation" amount, which is about the same amount.

For example if the total approved amount is $2000 and I already received $1000 "actual cash value" upfront and I would get another $1000 depreciation back upon completion and submission of invoice from contractor.

Say for example the contractor only replaces a smaller portion of the drywall and only charges me $200... but he gives me an invoice of $2000 that I can use to send to my insurance so that I get the full preapproved depreciation amount back. Is that illegal or fraud?

 

[quincy]

What is the name of your state? TN
My home insurance paid a "cash value" portion of a claim of interior drywall damage due to a storm. If I replace the drywall in 2 rooms, I can submit the invoice from my contractor and the insurance will pay the remaining "depreciation" amount, which is about the same amount.

For example if the total approved amount is $2000 and I already received $1000 "actual cash value" upfront and I would get another $1000 depreciation back upon completion and submission of invoice from contractor.

Say for example the contractor only replaces a smaller portion of the drywall and only charges me $200... but he gives me an invoice of $2000 that I can use to send to my insurance so that I get the full preapproved depreciation amount back. Is that illegal or fraud?

I am not sure I understand. Your insurer will assess the damage and pay you directly (and you can do what you want with the money) or you can submit an invoice for payment and your insurer will pay it to the contractor.

 

[Zigner]

Say for example the contractor only replaces a smaller portion of the drywall and only charges me $200... but he gives me an invoice of $2000 that I can use to send to my insurance so that I get the full preapproved depreciation amount back. Is that illegal or fraud?

If that's how it goes down, then it's definitely insurance fraud. But, as quincy pointed out, that's now how it usually works. You would receive the payment and you would deal with the contractor on a relatively small amount such as this.

 

[adjusterjack]

Is that illegal or fraud?

It's insurance fraud and it's a crime for which you can go to jail. Don't risk it.

The other two are correct. Most insurance companies have a threshold below which they will pay the full amount of the claim based on the adjuster's estimate or the contractor's acceptable estimate. Years ago before I retired it was $2500. These days it might be more.

If you want to take the money and cut corners to pocket some of it, that's up to you. But the next claim you have with similar damage, the adjuster will recognize that the repairs weren't completed properly and reduce the settlement by the amount of the previous claim.

It's a different thing if your contractor does the proper repairs for less than what your insurance company pays you and you keep the rest. Nobody cares about that.

 

[FlyingRon]

Actually, if there is a mortgage on the property, it's quite possible the check will be made out to the lien holder and the owner. The lienholder may insist on proof that the repairs have been made.

 

[adjusterjack]

True. But there is even a threshold for that, below which the check may be made out to just the policyholder.