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Safeguarding Your Home: A Guide to Avoiding Insurance Fraud

Homeownership comes with its fair share of joys and challenges, but one aspect that can often get overlooked is the risk of falling victim to various types of fraud. Fraud can take many forms, from identity theft to contractor scams, making it crucial for Florida homeowners to stay vigilant. In this blog, we will explore the warning signs of insurance fraud and how to protect yourself and your home.

Table of Contents

1. Understanding Fraud: What Is It?

2. What Are the Warning Signs of Fraud?

3. AOB Fraud: How Has It Evolved?

4. What Are the Consequences of Insurance Fraud?

5. Reporting Fraud: What Should You Do?

6. Empowering Homeowners: The FInal Step In Fraud Prevention

Understanding Fraud: What Is It?

In simple terms, fraud is the deliberate act of deceiving someone to obtain property, money, or legal rights. In Florida, penalties for committing fraud can range from fines to imprisonment. Homeowners in the state face unique challenges, including contractor fraud, home repair scams, and even bad faith claims perpetrated by the insurers themselves.

What Are the Warning Signs of Fraud?

The first line of defense against fraud is identifying potential warning signs. Whether it’s an unannounced contractor at your doorstep or solicitors in unmarked vehicles, always exercise caution. Here are some red flags to look out for:

  • Being contacted by a builder/contractor you didn’t reach out to first
  • Solicitors showing up in unmarked vehicles
  • Requesting payment in cash only
  • Offering “free” home repairs in exchange for signing over insurance benefits
  • Lack of a street address for their business
  • Requesting payment in full upfront before finishing the work
  • Offers that simply sound too good to be true

AOB Fraud: How Has It Evolved?

Assignment of Benefits (AOB) used to be a common practice where homeowners assigned their insurance benefits to contractors. However, this led to inflated claims and extensive litigation, significantly driving up insurance costs. Thankfully, new laws enacted in December 2022 in Florida have put an end to AOB agreements and one-way attorney’s fees for policies written after January 1, 2023.

What Are the Consequences of Insurance Fraud?

The ripple effect of insurance fraud impacts homeowners all across the country. High settlements and legal costs are passed down to consumers through increased insurance rates and higher mortgage payments. 
According to the Coalition Against Insurance Fraud, insurance fraud steals a whopping $308.6 billion every year from consumers in the U.S. Stopping fraud is not just about protecting individual homeowners; it’s about maintaining a fair and sustainable insurance market for all.

What Can Florida Homeowners Do?

Prevention is key when it comes to the threats of insurance fraud. The following tips can help you protect yourself from falling victim to insurance fraud:

  • Hire local, reputable contractors.
  • Verify a contractor’s license through the Florida Department of Business and Professional Regulation (DBPR).
  • Obtain three written and itemized estimates before selecting a contractor.
  • Avoid cash-only arrangements to maintain payment proof and recourse options.
  • Secure a copy of the signed contract.
  • Ensure your insurance company approves and covers repair costs before work begins.
  • Report suspected fraud to Fraud-Free Florida for potential rewards.

Reporting Fraud: What Should You Do?

If you suspect insurance fraud, never hesitate to report it. Fraud-Free Florida, the state’s anti-fraud initiative, provides a platform for reporting and even offers a $25,000 reward. You can submit your report online or call the insurance fraud hotline at (800) 378-0445.

Empowering Homeowners: The Final Step in Fraud Prevention

Homeownership should be a source of security, not vulnerability. By staying informed, recognizing the warning signs, and taking proactive steps, Florida homeowners can empower themselves and minimize the risk of falling prey to insurance fraud. Moreover, protecting your home and assets with adequate insurance coverage is the essential final step in staying secure. Please contact us today to set up an appointment and learn how we can safeguard your home through tailored insurance solutions.

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