Is it insurance fraud to buy items lost in a fire to get a receipt for replacement value and then return the item?
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Our house and 99% of my family’s personal contents were destroyed by a fire. I received a check from the insurance company for the “actual cash value” (replacement cost less depreciation) of items lost in the fire and In order to recover depreciation (50 -90% of the total value in many instances), I need to buy the items, obtain a receipt, and then submit it to the insurance company. This needs to occur before I will receive the replacement cost coverage I paid in the form of monthly premiums for 17+ years.
I can understand a receipt specifically identifies the market value or replacement cost of items lost in the fire and serves as the limit of their obligation. Does the law prohibit me from returning or selling the replacement items after I’ve obtained the item and forwarded the receipt to the insurance company? Or is this considered insurance fraud because I bought items to generate receipts, solely for the purpose of allowing me to be fully compensated by the insurance company for my destroyed personal items? BTW, the insurance policy makes no mention of what can or can’t be done with items after purchase. Only thing that IS clear to me is if I don’t buy $1,000 worth of unneeded baby clothes (our kids are now teenagers) and fail to present a receipt for that amount, I’ll only get the arbitrarily chosen depreciated amount of $75. I’d like to take $ from unneeded personal items and put that money into the house. I can see the possibility of a potential tax liability here, but not criminal insurance fraud. What am I missing here?
Asked November 13, 2017
1 Answer
Yes, it is considered insurance fraud to buy items that were allegedly lost in a fire, get a receipt for their replacement value, and then return the item for a refund. This is because insurance fraud involves intentionally deceiving an insurance company for financial gain. By buying and then returning the items, you are falsely inflating the value of your insurance claim and receiving compensation for items that you did not actually lose. This is a form of insurance fraud and is illegal. Insurance fraud is a serious crime that can result in severe penalties, including fines, jail time, and even a criminal record. If you have experienced a loss due to a fire, it is important to be honest and accurate when filing your insurance claim. This includes providing documentation of the items that were lost, such as photos, receipts, and appraisals. If you are unsure about how to accurately assess the value of your lost items, you can work with your insurance company or a professional appraiser. It is also important to note that insurance fraud not only harms the insurance company, but it can also lead to higher insurance premiums for everyone else. Insurance companies rely on accurate information to determine risk and set premiums, and fraudulent claims can lead to higher costs for everyone.
Answered November 14, 2017 by RedTicker