Mitigating homeowners fraud in Florida

hurricaneImagine you own a home near the coast in Florida and pay some of the highest homeowners’ insurance rates in the nation. You hear from a neighbor that you can save 16 percent on your insurance by hiring a shady home inspector who will vouch that you’ve taken steps to better secure your house against a hurricane. Just send the inspection report to your insurer — and save a bundle on your insurance.

Would you do it?

According to a new report, that’s exactly what many homeowners are doing. In collusion with inspectors, and sometimes insurance agents, homeowners are duping a system set up to lessen home damage during future hurricanes and reduce deaths and injuries. Sometimes the homeowners themselves are duped by inspectors who falsify reports just to keep the inspection business and give the homeowner a break on insurance.

The report by the Florida Association of Insurance Agents says up to 80 percent of re-inspections done by insurers find inspectors’ reports don’t jibe with the work done on the house.

The result of all of this is that honest homeowners end up subsidizing rates for those who are cheating. Plus, when the next hurricane hits, there will be greater economic damage and even more injury and loss of life. The report hints that this rampant fraud is discouraging insurers from writing more homeowners coverage in the state.

Florida’s insurance regulators are mostly to blame for their “singular focus on cutting premiums at any cost” that has “mortgaged Florida’s future,”  according to the report. Recommended solutions include regulating inspectors, prohibiting kickbacks from inspectors to insurance agents and funding a state bureau to investigate this type of fraud.

Sounds like good advice. The Florida Association of Insurance Agents is commended for bringing this issue to light. Fixing the homeowner premium credit system is in the public interest and will boost the integrity of the state’s homeowners insurance market.

What price new siding?

I love seeing letters like the one below. Wherever hail seems to hit — mostly in the Midwest — these siding salesmen emerge and try to convince otherwise-honest homeowners to become quiet conspirators in costly fraud schemes. My favorite line in this letter: “I would love to have free siding, but the cost of committing insurance fraud is just too high.” If more homeowners understood that, these dishonest sales people would fade away.

Here’s hoping that insurance investigators follow up on this scam and that the salesman and the homeowners with the shiny new siding are called to account for their frauds.

Hail has no fury . . .

A fierce hailstorm blows through your neighborhood, pelting houses and potentially causing damage, but your home survives nicely. What to do as 30 to 40 contractors come knocking, insisting you need a new roof and should replace your siding? Many of your neighbors are taking advantage of the situation.

Read how one woman handled this potential ethical dilemma. It gives us hope.