Some examples of homeowner insurer fraud and unfair or deceptive trade practices include:

-Abusing programs like Xactimate or Symbility to generate estimates that are far below the actual market price of the repairs caused by the covered loss. Putting aside the accuracy of the price lists used by these programs, insurers often save substantial sums of money by incorrectly configuring the default settings in these programs. One insurer was so brazen as to represent it was using the program’s standard price lists, while secretly editing the price list and/or writing the estimate using the wrong labor efficiency model and then switching the labor efficiency before printing the estimate.

-Insisting that the insured allow the insurer to generate the loss inventory after a covered loss.  Often the insurer will remove the personal property from the residence prior to the loss inventory being generated so that the insurer can try to salvage the property.  Once the insurer has completed their salvage effort, the insurer returns the salvaged property with a loss inventory that lists the total loss items. Often the items are listed as “2 toys” or “5 books.”  From this vague description the insurer assigns a value, and attempts to leave the homeowner without the ability to figure out what property was discarded by the insurer, let alone challenge the unrealistic values assigned to the unreturned property.

-Using economic coercion to force the claimant to use their preferred repair contractor. Many states require insurers to give claimants a choice in contractors. Other states require insurers to guarantee the work of contractors the insurer selected. Insurers illegally control their costs by: getting unrealistically low bids from preferred contractors; stating to claimants that the insurer will not pay more than that bid; and then claiming that the claimant selected the insurer’s contractor when the insured only used the insurer’s preferred contractor because they could not afford to use any contractor charging market prices for the necessary repairs.

-A follow on to the preceding scenario, most policies cover living expenses so that while an insured’s home is being repaired, the insured will be covered for the reasonable cost of comparable substitute housing.  Many unscrupulous insurers threaten to cut off this policy benefit if the insured resists the insurer’s usually ridiculously low bid and equally unrealistic time frame for completing repairs.  Faced with no home and no way to pay for substitute housing, many insureds relent, and their house is “repaired” by the insurer’s preferred contractor in such a way that the house suffers a significant diminution in value.  While some insureds sue the insurer and usually recover their losses and then some, most insureds do not, thereby making this practice profitable to insurers.