Insured Pocketing Claim Check - Is this LEGAL

[AZDave]

So I had an insured that just had a total roof loss & he has a slate roof. They carrier wrote a check for $45,000 to him & his mortgage company.

He plans on putting on regular cheap 25 year shingles & pocketing the difference (which is like 25k in his pocket.) That's technically OK right? The 45k check he got from the insurance company was after holding depreciation. They'll reimburse extra once the work is done.

But again, he can just keep the difference between cheap asphalt shingles & the payment he got right? Will the mortgage company care if he doesn't replace w/ slates?

Wow, slate roof totalled? Some bigass hail storm, or what.

It's his right to replace with shingles. Now he has extra $ to buy more insurance from you!

 

[insurance1822]

Yes we did get hail but I don't think enough to total a slate roof. The carrier adjuster approved it. Between this...another total roof & a slip/fall reserve raised 100k...I'm out of profit sharing already for 2016 with this carrier.

I'm sick to my stomach

 

[GXR2]

The job of a homeowner is to mitigate potential losses. So if he had a slate roof before and his area gets massive hail storms that can smash slate roofs, than a slate roof (like kind and quality) isnt appropriate for his area. That said I still would NOT tell him its okay to buy something cheaper and pocket the difference.

 

[Andle]

Technically insurance is meant to put the person back the way they were before the loss. If they've calculated the indemnification based on a more expensive roof he had, than he should put that same type of roof back on. If he's trying to pocket the difference it becomes an ethics concern and maybe a type of insurance fraud. I wouldn't give him advice to do so because he could blame you that you said it was okay. In fact, now that he has said that to you he sounds a bit shifty. I would send him an email letting him know you're aware of his prior roof type and that you recommend he restore his roof to the like kind and quality it was before the loss and leave it at that. Keep the email in your file in case the situation comes back to bite you in the ass!

So, when a customer has a fender bender and is paid out for the damage via the at fault parties insurance they should have the car fixed or they are shifty?


Document the conversation and move on.

 

[GXR2]

So, when a customer has a fender bender and is paid out for the damage via the at fault parties insurance they should have the car fixed or they are shifty?


Document the conversation and move on.

Cashing the check if you have a loan or lease is fraud, and it can end bad for you.

If you own the vehicle and have a collision in the future your insurance compamy will deduct for preexisting damage from the payout.

Typically if you own the car and make a claim on your own auto insurance you can take the cash minus your deductable. The insurance company has fulfilled their obligation by paying you.

The sticky situation exists if you have damage again in the same area that wasn't fixed and file another claim it could be seen as fraud.

Some people have no integrity and will try to file another collision claim for the same damage a few years latter, or when they change their insurance company - That is definatly fraud.

 

[hesse]

The job of the insurance company is to put you in the same position you were before the loss minus ded. if his house was 200k with a 40k slate roof they pay 40k he puts on asphalt for 20k. Reason states the home is now worth 180k. There for the insurance company put him back into the position he was in before the loss.

Not an issue here in mn

 

[GXR2]

So, when a customer has a fender bender and is paid out for the damage via the at fault parties insurance they should have the car fixed or they are shifty?


Document the conversation and move on.

One other point I want to make toward this question ...

If you have a collision and make a claim on your own auto insurance and use the cash for example to go to Tahiti or whatever, that can be seen as "shifty" - As perhaps the collision was done on purpose to scam the insurance company out of cash for your own pleasure.

The best advice to tell your client is if they're not planning on trading in the car and using the money for a down payment, than use the money as the insurance company intended to compensate you for and fix the car. (most sane people won't smash their car to get insurance money for a down payment as they want the most trade in value for their car) This will eliminate any suspicion of fraud or mal integrity.

I always advise to document your advice via email and keep the email in case it comes back to bite you. There are many wacko clients out there that will throw you (agent) under the bus to save their ass. Document, document, document.

What the client chooses to do against your advice is out of your control and not your problem.

 

[indienoise]

Seems clear cut to me, the carrier returned him to the same financial position he was in before. He decided to use a different material that won't cost him as much to replace if he were to foot the bill. Sure, it may have changed the value of the house, but in the event of another loss, he would be compensated accordingly, and if he sells the house, if it affects the value then he absorbs the economic loss which balances the scale.

Win for you because if another hail storm moves in, it doesn't ding your LR as bad.

I don't see how this is an ethical problem, really.

 

[JKND82]

Good stuff! Hope my cases are rare and can find clients that have more integrity!