Is This Insurance Fraud?

ron schenker

I get a call to do an estimate at a home that had an overflowing toilet on the second floor. An emergency service had already been there to tear out damaged ceiling drywall and carpet in the dining room, family room and a small bedroom in the basement. I priced everything out at $3600. Labor 2600 and materials 1000. Lady was very nice and wanted to give me the job right there and then, but needed 3 estimates. I was the first. Two days later she calls me back and says the insurance has approved an estimate from the restoration company that did the original emergency work. Their estimate was for $9000. I know this was true because she gave me a copy of the estimate.
She hasn't handed in my estimate yet, and wants me to bump it up to $9200. This way, she'll give me the job, get a check for $9000 and have money left over to pay me for more work around the house! Something seems fishy to me, but on the other hand I could use $9200.00 worth of work. I've only done one insurance claim job, and it was all legit, so I need your input on worst case scenario like tax repercussions, fraud, etc. Thanks guys.

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Cole

I am very confused.

So the insurance company is going to pay the emergeny service company, $9000, yet she wants you to say your estimate is $9200 instead of $3600?

Am I correct?

If so, yes this is insurance fraud. Will she get caught, probably nope. Will she spend the money on fixing other parts of the house, probably not.

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dougchips

Stick to the $3600. All the bad that can come from the deal is not worth 5k or even 50k, maybe 100k.

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ron schenker

She basically feels that now her insurance owes her $9000 and if she can get it done for less and use the extra money for other stuff like new hardwood, new roof, etc. then that's her option.

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Celtic

Is it possible the two figures are apples and oranges ...are the estimates for the SAME work?

ron schenker

Their estimate was for parquet flooring @ $4000 installed compared to my hardwood @ $1500 installed (235 sq.ft.) The rest was mostly install drywall, minor trimwork, prime and paint. Their materials = $4210 labor=$3820 plus additional charges for cleaning, disposal, minimum this and minimum that, etc.
Obviously they are a very large company specializing in insurance restorations with many trucks on the road and lots of employees, overhead, etc. but I can do just as good a job for much less for 3 days work. But something tells me to "just say no"

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Celtic

Don't get me wrong here Ron....I'm trying to make you some money.

So far we know there is one difference...parquet/hardwood.

Are there any other differences?

Type of paints (quality), number of coats (same for tape/mud job), etc.

Other considerations:
- warranty....do you/they offer one on the work ~ duration. scope of coverd items, etc.

- time ....how long will the HO be "inconvieneced"....speed costs extra, can the HO remain in the unit during the repairs, etc Are these numbers/ideas addressed by you/them?

- etc

These "little" items add up.

Is it possible you sold yourself short to get the job?
(Remember, I'm trying to make you money )

Tom R

Sounds to me like you're going to be the one 'lying on paper', - - for her to reap the benefits.

Personally, - - I wouldn't get involved in it.

She gets the money for a fraud that bears your signature??

Tom R

What if she were to make a copy of your first estimate, - - then get you to write up a new one, - - then after you do $9200 worth of work, - - hold the first one over your head??

So far we already know she's dishonest.

What makes you think she'll be honest with you??

ron schenker

The only difference I can see is that they will keep stipple on the ceiling whereas I won't, and they will shampoo a 11x10 carpet that really didn't need it. I will take 3 days, they might do it in 2, and I have no idea about their warranty or type of paint, but I will use Ben Moore.

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ron schenker

I don't know about dishonest, because if I back out she can just go with the other guys. All she will pay is $1000 deductible.

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Ed the Roofer

Firstly, I want to make an extremely important point! It is NOT up to the insurance company to select the contractor that any insured selects, nor to tell that contractor how they should price a job, although through intimidation methods, that is what most homeowners and many contractors are led to believe.

Now, that you are privvy to additional work being supplied by the other company in their estimate, you may update your specifications.

I would think that you could re-write your proposal specs to add on for an "Unknown" factor and "not to exceed" the approximate $ 9,000.00 insurance funding.

This way, you have your contract for the $ 3,600.00.

If at least 3 different trades worth of work are required, Painter, Floor installer, Drywall contractor, Insulation Contractor, then it is permisseable to add in for an additional "General Contractors" overhead and Profit of between 10 % to 20 % without any typical objections.

The following information is directly from the "Insurance Information Institute".



HOMEOWNERS INSURANCE INFORMATION


The settlement amount depends on which type of policy you have. Having inadequate insurance can affect the amount of compensation you get

Replacement Cost and Actual Cash Value

Replacement cost provides you with the dollar amount needed to replace a damaged item with one of similar kind and quality without deducting for depreciation—the decrease in value due to age, obsolescence, wear and tear and other factors. An actual cash value policy pays you the amount needed to replace the item minus depreciation
END OF INSURANCE INFORMATION INSTITUTE QUOTE.

The woman is legally and contractually entitled to receive the full replacement costs, minus contractual deductibles, but not due any unjust enrichment.

Many adjusters have an in their pocket contractor set up so a "finders fee" can be appreciated. That is illegal too, but hard to prove.

Ed

Chris G

That estimate approval might only be valid if the other compnay does the job. They could be an approved vendor for them.

Will the insurance company be making the cheque out to her or the company that does the job? When I last had my car repaired under insurance, all cheques were made out to an acredited body shop, not me.

On the other hand, when I had my tools stolen, they just made out a cheque to me and said I was free to do whatever I wanted to do with the money. If that's the case here, then there's no fraud.

But if the insurance company was asking for three estimates, (or was it just her?) they wouldn't have approved anything until all estimates were received, and yet she said she had not submitted yours.

woodmagman

I am not a lawyer, if the cutomer wishes to make money on the deal then she should settle and sign off on the claim at what ever she wants to. Then she can pay you what you require and pocket the balance. This way it is all above board......

ron schenker

Let's pretend there was no other contractors involved. She submits my estimate for $9000. Insurance company sends her a check for the full amount. In reality I only charged her $4000, so she has an extra $4000 in her pocket after paying $1000 deductible. What are the chances that they will come in and inspect my work and say " this is not a $9000 job" let's see your books. Not likely! Then she gives me other work to do to the tune of $4000 and everybody is happy. This is the best case scenario, right?

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HUDSONVALLEYEXT

It aint worth getting caught in fraud


Did an estimate for a guy with a burned house. Told him $75k he called me back to talk to him a few days later. He wanted me to submit 100k to the insurance company and give him $25k back. I did not take the offer its not worth the trouble you can bring on yourself

Celtic

It sounds like you want us to confirm what you've already decided to do....

North Country

I would be very careful in how you approach this, conspiring to commit fraud is illegal also.

WNYcarpenter

Three things...granted, insurance practices screw us everyday. That being said it's great when you're in a situation to actually profit (screw the insurance co. ). Secondly, every case of insurance fraud drives the rest of our premiums up! It always seems like the folks who need it most are the ones who get screwed....(I hate insurance companies ), and finally, "mudmaster" had a box full of new DW equipment sent to him by SHEETROCK for posting here, so you never know who may be listening.

I'd say don't trust anyone and submit a quote which your conscience allows!

reveivl

Who will you hand your invoice to? Her, or the Insurance Co.?

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