Insurance fraud question?

Question

Hope u guys can settle an argument. My mate has accidental damage insurance via his home insurance. His stereo is pretty old and he told me he could buy a really good, but damaged one dead cheap, say he owned and damaged it, and claim for a new one on the insurance.

Ignore the fact that this is highly immoral and will end up increasing MY premiums, I thought that one danger was that if the system he picked up had already been through an insurance claim then some sort of serial number would have been logged. He'd then have to explain himself and risk, at best, his policy being cancelled, and at worst prosecution.

He says they don't log serial numbers of items so it is possible. Luckily for all he got a new one for his birthday but we still argue about it to this day!

If anyone in the know could shed any light on this at all i'd be really grateful. Thanks!!

Answer 1

if he did the damage himself and filed the claim, the insurance company will pay him DEPRECATED value of the item until he PROVES he replaced it with a brand new one.

Answer 2

Yes, for the most part, they don't log serial numbers.

But for the most part, "damage" like "oops I dropped it", is NOT covered under the homeowners policy.  The coverage for 'stuff' is on a named perils basis - fire, lightening, explosion, hail, theft, falling objects, etc.  So it's not quite as simple as he says.

Additionally, as you both seem to be guys, clearly you aren't married - unless his name is on YOUR homeowners policy, HIS stuff isn't covered.  He'd need a renters policy to cover HIS stuff.

Answer 3

you should ask your insurance agent to find out the answer to this question.

Answer 4

If your friend has contents coverage on his "stuff", and if he has replacement value on his policy, the insurance company will replace it with "like kind and quality",  minus his policy deductible.

As an example, this means that if the stereo cost $500 ten years ago, but to purchase like kind and quality today it would be $850, the insurance company would pay for the $850 stereo, minus the deductible.

The above information would be correct if the property was damaged by a covered peril. But if your friend "accidentally" damaged it himself in order to get a new one, he's outta luck. That's called insurance fraud.

Answer 5

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Answer 6

He would also have to prove the price that he paid for the unit, so I don't think he'd be in any better shape, ignoring all the relevant ethical dilemmas, etc...

Answer 7

Sure he could buy a really old system and bang it up and file a claim.

Yes, that is insurance fraud.

Yes, that is a crime - felony actually

and Yes, he could be prosecuted for it.

And it's  the same as if he reached into your wallet and removed your money. Every homeowner pays higher insurance premium because of insurance fraud.

Here's a few other problems.

1. He can't file against your policy unless he is listed as an insured on your policy.  Sometimes your policy will give very limited coverage to other peoples property that is in your care, custody, control .....but since you don't sound willing to patriarchate his is crime, that's gonna be tough.

He has to have an insurance policy of his own.

2. Damage to personal property is usually named peril. So, unless one of the named perils causes the damage..no coverage (at least it's like that in the US).

3. The insurance company would owe to replace his stereo with like, kind and quality. So, he would get paid the value of a new stereo that is exactly like the damaged one.  So, if you have a 32" TV that is 10 years old and it is damaged in a covered loss -- the insurance company does not owe you a 32" plasma. They owe you one that is most similar to what you have (if you have a replacement cost policy).

4. Insurance companies do track claims. There is a database that many insurance companies subscribe to that lets us know when you have had a prior claim.

5. Too many claims-- and your insurance policy will be can canceled.