Insurance Fraud 2:
We dealt with short term insurance fraud in our blog yesterday and today will look at a recent case study to illustrate the issues previously discussed by ourselves and the consequences of fraudulent insurance claims.
A client of ours who will call X had the following experience.
He employed a casual domestic worker at his home in Port Elizabeth a few months ago and a short while after the commencement of this employment relationship his wife noticed that her diamond engagement ring and three very expensive watches were missing from her jewellery box in her bedroom.
Mr X was very angry about this situation; but there was no proof of theft or who had taken the items in question and he felt that when he claimed the insurance company would reply by stating that as there was no forced entry to the premises that his insurance claim would simply be declined.
He decided to make up the story that his wife’s handbag had been stolen when she was out shopping and that the missing items had all been in the handbag at the time.
After he had reported these facts to both the Police and his Insurance Company; and his insurer had already asked for proof of purchase for his claim; his conscience got the better of him and he decided to come clean about the true facts. Before he did so however; he contacted the branch manager of the insurance company and asked if he could withdraw his claim. The manager advised him that the claim was already with the assessor; but that he would inform the assessor accordingly.
The assessor then contacted X and set up a meeting to discuss the matter and to issue him with and get him to sign a withdrawal form. At this meeting; which was formally recorded; X confessed to what he had done. He admitted that what he had done was wrong and expressed deep remorse for his actions. As he left the meeting he felt relief at having come clean on the entire matter.
This relief was short lived however. Shortly after the meeting he got an e-mail fromhis insurer stating that his claim had been rejected and his policy had been cancelled with immediate effect; as a result of his dishonesty. He asked us how they can reject a claim that he has withdrawn; and the short answer to that is that he had requested that the claim be withdrawn but before doing so the insurer decided to rather reject the claim and cancel the policy which they were entitled to do in terms of his original insurance policy.
This action by his insurer has resulted in his not being able to get alternative insurance from another insurance company and is a permanent blot on his record as insurers share this information.
All insurers ask this question or something similar on their application forms: “Have you or a family member ever had a policy cancelled by an insurance company?” That is the problem X Has. If he answers truthfully and says “Yes”; he will not get insurance and if he says “No” and lies he might get the insurance; he will pay premiums; but is likely to have any claim rejected and his policy cancelled again; when the insurer finds out the truth; as they will dig deeper when he files an insurance claim again. This is the permanent problem he now faces for being dishonest in his version of the events when making his initial first claim.
As stated above insurers and insurance companies share this information with one another; and once you are blacklisted by one of them; none of them will ever give you insurance again. It all gets back to a blog that we did on insurance some months ago; when we explained that an insurance policy and agreement is a contract entered into by both parties; “uberimae fides”; which means with the utmost good faith and if you are dishonest in your dealings with your insurer there will be severe financial and legal consequences.
The Legal Advice Office Team.