Home Insurance – Don’t Defeat Your Primary Purpose

Let’s face it, almost every insurance article you have read till date is boring, overflowing with statistics and calculations, simply put, a pain to read. I am going to try to keep it light, and, coupled with some anecdotes; this article should be an entertaining read for you.

Home insurance is the protective cover or insurance provided under the category of general insurance against unforeseen disasters and mishaps. Which means, in case you insure your property, you can rest assured that if a burglar visits in your absence, the insurance company shall pay for all damages. The insurance firm shall also pay, if a tornado decides to whisk your home away, leaving you without a roof over your head.

While a lot of people would like to talk about the technical aspects of buying an insurance cover, the types of insurance covers available, coverage provided by different policies, applicable exclusions and procedures for claims settlements, I would like to talk about a different aspect. Insurance fraud is something that has been an intricate part of the insurance debate.

Once a lawyer, fishing in the Caribbean happened to meet a compatriot engineer who was also enjoying his holidays at the same resort. In order to show off, the lawyer bragged, “All this was paid by my insurance company as I lost my house and belongings recently in a fire.” The oblivious engineer replied, “Tough break mate, I too lost everything in a flood recently.” Trying not to appear curious, the lawyer asked nonetheless, “How can you make a flood happen?”

Not funny. Especially when you come to know that every time the insurance company loses a case, the cost is almost always passed on the remaining clients and consequently the premiums shoot up.  To avoid such frauds, insurance companies usually employ investigators to look into seemingly shady claims.

In another remarkable incident, a couple happened to lose their home and all their belongings in a domestic fire. The couple claimed ignorance when questioned over the origin of the fire. Sensing something amiss, the insurance company launched an investigation and soon something intriguing came to light. A neighbor seemed to remember the woman leaving in her car, just minutes before the smoke of the fire start billowing out of the windows. On further investigation, it turned out that the couple had paid a visit to their insurance agent to ensure that their policy was intact and would cover any fire damage. Needless to say, the claim was denied, and the couple was indicted in an insurance fraud case.

The insurance companies are often seen as a ‘soft target’ by people trying to make a quick extra buck. Exaggeration of insurance claims or outright frauds is something which is a common occurrence. What such people fail to understand is that apart from losing your entire life’s investment and getting the claim rejected, you can also face a jail term or hefty fines if caught for insurance frauds.

The motive of buying an insurance policy is to be safe and secure in the first place. There is no need to go ahead and try to defraud the insurance company, for that will only defeat your primary purpose.

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