1. Statutes Vary From State to State – Depending on where insurance fraud occurs, the same act can carry a penalty of restitution and community service or, at the other end of the spectrum, a jail sentence under a felony conviction.
2. “Hard” and “Soft” Insurance Fraud Carry Different Penalties – “Hard” insurance fraud is defined as a willfully illegal and fraudulent scheme designed solely to obtain money from an insurance claim. “Soft” fraud occurs when someone doesn’t fully disclose pertinent information or “fudges” the details to profit from a legitimate claim. In most states, these types of fraud carry different penalties.
3. Mail Fraud – Fraudulent schemes that involve the use of the U.S. Postal system can face fines and up to 20 years of prison time. In the event of fraud that targets a financial institution, fines can reach up to $1 million and be accompanied by a maximum prison sentence of 30 years. Using the U.S. mail system to mail a fraudulent insurance claim is in violation of this statute.
4. Health Insurance Portability and Accountability Act – The HIPAA Act of 1996 made healthcare fraud a federal crime punishable to up to 20 years in prison. This law protects both private insurance companies and government programs, and prohibits the willful falsification of facts or failure to disclose pertinent information in connection with a health insurance claim.
5. Wire Fraud – Using the telephone, internet or a fax machine to carry out fraudulent insurance schemes is, like mail fraud, a federal crime. The penalties can include up to $1 million in fines and imprisonment for up to 30 years.
6. Medicare Fraud – Making a fraudulent Medicare claim can carry fines between $5,000 and $10,000, plus three times the amount of damages under the federal False Claims Act.
7. Workers Compensation Insurance Fraud – Because worker compensation laws vary in each state, the penalties of workers comp insurance fraud vary as well. In some states, any payment at all received from a fraudulent workers comp claim is considered a felony offense and carries a maximum sentence of 30 years imprisonment.
8. Conspiracy Laws – In some states, collusion or assisting someone in making a fraudulent insurance claim or application can carry fines and jail time.
9. Injury Laws – Exaggerating pain or injuries sustained in a car accident for the purpose of receiving higher compensation is considered auto insurance fraud, and is punishable as such under various state laws and statutes..
10. Felony Insurance Fraud – Staged accidents that involve the destruction of property for financial gain via an insurance claim is considered felony insurance fraud. Fines and maximum jail times vary from state to state, but can be up to $150,000 and 10 years imprisonment.

In conclusion, anyone who knowingly provides inaccurate information or doesn’t divulge pertinent details during the application, underwriting or claim-filing process can potentially face fraud charges. If fraud is discovered but charges are not filed, it almost always precludes the guilty party from obtaining insurance through traditional channels in the future.

In this economy, can anyone trust that their job is safe? Job loss can be financially devastating, but it’s nothing compared to the risk of losing your home when you can no longer afford to keep up with the mortgage payments. Added on to your existing policy as a rider, protection against job loss can pay your mortgage when you lose your job through no fault of your own.

• Job loss results in foreclosure. According to a study conducted by the Pennsylvania Association of Realtors, job loss and unexpected medical bills are the main causes of foreclosure in that state. Contrary to the popular view that subprime housing is the main cause of foreclosures, 57% of households said one or more of their wage earning family members had experienced job loss in the 12 months leading up to the foreclosure, and 47% said they had been blindsided by unexpected medical bills.
• It’s not about subprime mortgages. In New York, a Poughkeepsie-based nonprofit housing agency determined that 66% of homeowners who were seeking foreclosure prevention counseling said it was loss of jobs or a reduction in income that started their financial nosedive. Most of them had conventional fixed-rate mortgages, not those subprime loans with creative financing we’ve heard so much about. 79% of those seeking counseling have conventional loans, compared with 43% in late 2008 when the program began.
• It’s hitting middle America. Although the subprime mortgage market may have started the ball rolling and exposed the housing bubble and Wall Street betting – ah, trading – practices, the folks who are now most at risk don’t even have subprime credit ratings. As the financial slump wears on, more and more companies are looking for ways to cut expenses. With this kind of environment, it’s hard to tell whose job is safe anymore.
• Job loss rider. A job loss rider is a special add-on to your existing homeowners insurance policy that pays your mortgage and protects your home in the event you are let go through no fault of your own.
• Insuring the loan. The rider is designed to pay the lender, not the homeowner, in the event of job loss, so don’t expect to get any checks in the mail.
• Waiting period may apply. There is usually a 30 – 60 waiting period after job loss before coverage kicks in, so be sure to review your policy carefully and keep enough in savings to cover the first few months of expenses after an involuntary job loss.

No one expects to lose their job, but these days, it’s wise to think ahead. If your mortgage payment is heavily dependent on your income from working, now is a good time to consider adding a job loss rider. If you do find yourself out of work, you’ll have peace of mind knowing you can look for a replacement job without risking the loss of your family home.

Insurance companies are rated based on their overall financial health and ability to meet their fiscal obligations. Individuals have credit scores, which basically correspond to the same idea. A consumer’s credit score is a three-digit number that represents the individual’s creditworthiness. It is used when determining whether to loan money to consumers, and is often a good indicator of overall financial health.

Insurance scores are somewhat like consumer credit scores. They are based on information contained in consumer credit reports, but the algorithms they use are proprietary and therefore not made available to the general public. Since the calculations are based on the data in your credit file, though, you have some measure of control over your insurance score, and you can and should work to improve it.

• Your insurance score is intended to gauge the likelihood that you will file a claim against your insurance.
• High insurance scores are like high credit scores. The higher the score, the lower the risk you are believed to pose to an insurance company.
• Insurance scores are used in determining the premiums you’ll pay for all kinds of insurance plans, including auto insurance, homeowners insurance, renters insurance, and more.
• Some states limit or regulate how consumer credit information can be used when determining insurance premiums.
• The insurance score most often used by insurance companies was created by FICO and is referred to by different names at the different credit reporting agencies. Equifax calls it InScore®, TransUnion names it Fair Isaac Insurance Risk Score®, and Experian refers to it as Experian/Fair Isaac Insurance Score. All of these calculations are based on the algorithms created by FICO.
• In calculating your insurance score, your credit information is compared with that of other people. Your insurance score therefore represents a relative risk factor. That is, insurance scores evaluate the claims risk that you pose to an insurer in relation to the risk that other people pose. Your number may be higher or lower based not only on your credit file, but on the general creditworthiness of the consumer market.
• Data from millions of past individual insurance claims help to isolate the factors that are associated with an increased risk of claims. These are assumed to be effective predictors of future claims risks.
• Since the calculations are kept secret, no one can say for sure exactly how to improve your credit score. It is believed, however, that the same things that affect your credit score will also impact your insurance score.
• There are other factors that are likely to have more impact on your policy premiums than your insurance score, but that doesn’t mean insurance scores aren’t important.

Make sure you know what’s on your credit report. Request a free copy annually at a minimum, and be sure to check it for errors. If you use your credit wisely, you can expect to have a strong insurance score and get the lowest premiums possible.

These days it seems like everyone is stretched to the financial limit, with so many unemployed and even more struggling to make ends meet. The last thing you need is an increase in your homeowners insurance premium, but that’s just what’s in store for many who file claims.

There are three types of claims you can make against homeowners insurance that are most likely to trigger a rate increase the next time you renew.

• Dog Bites. Both the number and the costs of dog bite claims have been rising over the past few years, prompting many insurers to take action against dog owners. Whether they refuse to renew a policy or simply exclude dog bites from your coverage, you may find that filing a claim because your dog bit someone could result in loss of coverage. Even when it doesn’t cause you to lose your policy, your insurer may raise your rates the next time you’re up for renewal.
• Water Damage. Even if you don’t live in a flood plain, filing a claim for water damage could trigger automatic increases in your policy’s premium. This is true not only because of concerns over future flooding, but also because of the high risk of mold and the exorbitant cost of having it removed. In many cases, homes with mold are considered a health risk, and removing all of it can take a lot of time and money.
• Slip-and-Fall Claims. This is a general term used for any injury that happens when someone trips, slips, or falls down in your home.

Before you fill out a claim on your homeowner’s policy, think about other ways of covering the costs.

• If the injured person is a member of your family, it may be best to have your medical insurance company foot the bill rather than filing a slip-and-fall claim.
• If the cost of water damage or a dog bite is manageable without filing a claim, think about taking care of it yourself.
• Even if the cost is a bit more than you can handle out-of-pocket, you might want to consider borrowing the money at a low interest rate rather than filing a claim that could hike your rates. It might just save you some money.

When costs are unknown or ongoing, such as a serious dog bite or slip-and-fall injury that requires surgery or hospitalization, filing a claim with your insurance company may be the only way to protect your assets from a lawsuit. Carefully consider your options before filing any claim, though, and take steps to keep your home safe.

Many of us have our homeowners insurance through one company, our auto insurance through another, and our life and health policies through yet a different insurance company. While there’s nothing wrong with that, in and of itself, there are several advantages to carrying multiple lines of insurance through a single company. Here are some of the main ones:

• Convenience: It’s simply more convenient to do all of your business through one company. It saves you having to write multiple checks for multiple policies, allowing you to write out a single check in many instances.

• Rapport: This goes both ways. You develop a rapport with the insurance agent, who has a vested interest in keeping your business, and he develops a rapport with you by taking care of claims promptly. We guarantee you that no insurance agent wants to lose a client who has more than just their homeowners insurance through his company.

• Easier Claims: While there is always going to be a claims process, involving an insurance adjuster, except with life insurance claims (dead is dead, pretty straight forward), your agent will see to it that the process is expedited if he knows that you are a solid client.

• Multiple Line Discounts: Many insurance companies offer discounts if you have several types of insurance with them. If your insurance company doesn’t, consider changing insurance companies. If you take all of your homeowners, auto, boat, life, and other insurance needs to the same place, the least they can do is offer you a discount.

• A more knowledgeable agent: Most of the best insurance agents deal with all lines of insurance. Agents who work with multiple lines tend to be the ones who have the most invested in their career, and tend to be more knowledgeable than others who may just be trying out the insurance game.

No one is saying that you should automatically give all of your business to the same company. Every now and again, it is a good idea to shop around for insurance rates, just to keep your current company honest. And, if you find a rate that is considerably cheaper than what you are getting, it may be in your best interest to go ahead and take it, assuming the coverage is similar.

Still, in most cases, you come out ahead by taking all of your business to a single insurance agent and company. If you don’t believe us, compare prices and see.

Image by greenkozi

Here are some of the top ways to save a few bunks and still have the homeowners insurance coverage you need:

• Look around. There are plenty of companies out there that offer homeowners insurance. If your state has an insurance department, they can provide you with a list. You can also check the yellow pages, or ask friends and family for referrals.  The key here is to be selective: only consider homeowners insurance companies that come recommended, or that have a solid record of good customer service and follow-through.
• Look for a multiple policy discount. Your auto insurer will usually offer a discount if you also purchase your homeowners insurance with them. In fact, you can save as much as 30 percent with some companies just by having more than one insurance product with that company.
• Make changes to your home. Some insurance companies will offer you a discount on your homeowners insurance premiums if your home is more damage resistant. That can include things like storm shutters or a reinforced roof. Homes in areas that are prone to earthquakes may benefit from a retrofitting to make them more resistant. An older home may be eligible for a discount by updating the plumbing or electrical systems. Finally, many homes can get a discount based on home security features like smoke detectors, dead-bolt locks or burglar alarms.
• Keep a good credit rating. Not all insurance companies consider your credit rating, and in some states this is becoming illegal. Still, a bad credit score can affect your premiums in some places.
• Increase your deductible. One way to lower your premium cost, whether its for homeowners insurance or auto insurance, is to raise your deductible. The deductible is the out-of-pocket amount you need to pay when something bad happens before your homeowners insurance kicks in.

What is your credit score?

It’s important, first of all, to get a handle on what your credit score really is. Every time you pay a bill, use a credit card, or apply for a loan, that action can affect your credit score. Your credit score is taken by looking at your credit report and, using a complex statistical analysis, comparing your credit history with the history of other customers like you. A credit score awards a certain number of points for each factor that goes into your credit report, and your overall total of those points is your credit score.

How do insurance companies use a credit score?

Some homeowners insurance companies will look at your credit report or credit score, along with other information about you, to help them predict whether it’s likely you’ll file an insurance claim and, if you do file a claim, how much it will be. That will then help the company to determine whether they can insure you, how much your insurance premiums will be and how much coverage they will let you have.

Getting a handle on your credit score

Under federal law, you’re allowed to get a free copy of your credit report from each of the three consumer credit reporting companies once a year. There is even a website, at www.annualcreditreport.com, where you can request the credit report.

While you’re allowed a free copy of your credit report, you aren’t entitled to your credit score for free. For that, you’ll have to pay extra. Each of the three consumer credit reporting companies offers your credit score, as well, and it is usually for a fee of right around $8.

How to use your credit score

There are a couple of ways in which having both your credit report and your credit score can be useful. First off, you should get them before you apply for homeowners insurance. This will help you know where you’re starting from in terms of how the insurance company sees your creditworthiness and your risk.

You can also use your credit report to identify potential errors and get them corrected. In addition, you can look at specific items in your credit report and identify potential areas of improvement, and be able to raise your overall credit score.

Photo via Andres Rueda

According to a recent study done for the Independent Insurance Agents & Brokers of America, too many Americans aren’t utilizing all of the various discounts that may be available on both auto and homeowners insurance. In the study, homeowners were asked if they thought they were taking advantage of all of their discounts. More than a third of the respondents, which represent around 53 million households, said they don’t think they are.

These numbers are staggering. In tough economic times, it’s surprising to think that folks are paying more than what they need. Even if it’s just a few dollars a month, these kinds of homeowners insurance discounts can really add up.

Many Types of Discounts

There are all sorts of discounts offered by insurance companies. There are discounts that are regional, for example. Of course, there are multiple policy discounts where customers who get both homeowners insurance and auto insurance through the same company may be able to save significant amounts of money.

There are even quirky and obscure discounts available, too. For example, some homeowner’s policies will offer a discount for installing radon gas detectors. Every dollar counts, and if you can save a few bucks by doing installing the device can pay for the device and increase your family’s safety at the same time.

There are discounts for living in a gated community, discounts for having a hail resistant roof, discounts for having a good credit score, discounts for new or modernized electrical wiring, and discounts for not having had a homeowners claim over a long period of time.

Discounts Deeper than Customers Suspect

The average respondent who indicated that they were saving money on their homeowners insurance with discounts suggested that they save around 6 to 10 percent of their premiums. However, most companies offer discounts that could give their customers a much more significant discount structure – as much as 30 percent.

Some discounts are sizable by themselves. Multiple policy discounts tend to fall into this category, as do discounts or not having any claims in the past ten years. These types of discounts can be as much as 20 percent or more.

If you’re not getting the discounts you qualify for on your homeowners insurance, talk to your insurance company today and stop giving away your money if you don’t have to.