Is this unintentional insurance fraud?

Question

Hi,

Have a property in Texas that received a hail damage settlement.  I own the property outright. A friend said that if I don't use the money from the insurance company to repair the roof it is considered insurance fraud.  I know if I wreck my car and choose not to get it fixed and keep the insurance money, that's just fine...

The same investor friend said that because hail damage is an "act of God" it will not have an impact on my future insurance rates. I don't think that is the case.

Any insurance professionals in Texas out their that can clarify these questions.

Thank you,

Kevin

Jason Bott · Answer

@Kevin Sapp not using the claim payout for exact repair the claim was made on is not insurance fraud.

Insurance companies all have their own underwriting guidelines/tiers when it comes to how much additional premium to charge for previuos claims.  Very difficult, if not impossible to estimate a % increase.  Just know there is a 99.9% chance your premium will not go down...but it could stay flat depending on the claim.

Kevin Sapp · Answer

@Greg H. @Fred Heller  Thank you for the confirmation.  I simplified the situation to the simplest component. The roof will be repaired.

Any comment on the increased rates and "act of God"?

I've been told that in NC there are multiple price tiers for future insurance depending on the number of claims in the past 3-5 years and severity of the claims. There is no waiver for "acts of God"  However, someone in Texas claims otherwise.

Thank you

Kevin

Fred Heller · Answer

Why would that be insurance fraud? The company paid you for the cost to repair the damage. If you choose to pocket the check instead of fixing the damage, it's no skin off their nose.  What would be fraud would be to wait for the next hail storm and then file a claim for the damage that you've already been paid for.The bigger question is why would you not want to repair the damage? Especially for something as important as the roof.

Greg H. · Answer

That is not insurance fraud

However, you will have to disclose via the required sellers disclosure in Texas that you did file a claim and did not complete the repair. Not a huge deal   Additionally, you roof might not be covered moving forward by your insurer