Most of us picture insurance fraud as a staged crash or a fire set for money. Homeowners run into it in quieter ways, from a padded claim to a contractor who offers to cover your deductible. This guide sticks to what Maryland, DC and Virginia say officially, so you know what counts, what to avoid and where to report it.
Fraud is not only an insurer's problem. Maryland's regulator says it ends up increasing the amount everyone pays in insurance premiums.1 Knowing the common schemes protects your wallet, your claim and your neighbors.
What Counts as Insurance Claim Fraud
The Maryland Insurance Administration describes insurance fraud as deceiving an insurance company or a consumer in an insurance transaction in order to make money.1 The District's insurance regulator, known as DISB, words it a little differently: a deliberate deception to obtain an illegitimate gain, committed by an insurance company, agent, adjuster or consumer.2 Read both definitions closely and two things stand out. First, fraud is about deliberate deception, not an honest mistake on a form or a misremembered date. Second, it can come from either side of the table, so a homeowner can be the person committing it or the person it is aimed at.
That is why this guide is split in two. One half covers what not to do when you file a claim. The other half covers the schemes that target homeowners, so you can spot them before you sign or pay anything.
Three Ways Homeowners Get Pulled Into Fraud
Padding or inventing a claim
Maryland's consumer guide lists exaggerated claims as a type of fraud, including inflating the value of items taken during a burglary or theft.1 It also lists phony burglary, theft or vandalism, arson, and staging a homeowner accident or burglary as ways to create a fraudulent claim.1 On the arson point, the guide describes a business, home or vehicle set on fire by the owner, or by someone acting for the owner, to collect insurance money.1
DISB gives the same idea a plain example: exaggerating a legitimate claim, or knowingly omitting or providing false information on a policy application, is among the examples it lists.2 The takeaway is simple. A real loss does not become safe to inflate just because it is real.
Contractors who work the claim, not the house
Maryland's guide describes storm chaser fraud as contractors who contract for repairs they never plan to perform.1 It also lists contractor deductible fraud as a type of fraud.1 A contractor who is willing to help you skip your deductible is also willing to help build a claim that does not match the real damage, and you would be the one signing it.
The guide's payment advice is worth following on any repair job: check and credit card payments usually can be traced and verified.1 Our storm chaser guide and our free contractor red-flag checklist go deeper on how these pitches usually sound.
Phony policies that look like a bargain
DISB warns that phony home, health, life and auto policies are offered at rates significantly lower than the traditional market price to lure consumers who are looking to save money.2 It adds that if you do not receive an insurance ID card or a copy of your policy in a timely manner, that could indicate your premiums have not been paid.2
The District's guide says you can find out whether an insurance company or agent is legitimate and licensed in the District of Columbia by checking with DISB.2 It also says that if you are unsure who you are dealing with, you should stop before signing any paperwork or writing a check.2 Maryland's guide gives the same advice in different words: verify that the company is licensed and make sure you understand the exact coverages you are getting.1
Why This Is Everyone's Problem
Maryland's insurance regulator says insurance fraud ends up increasing the amount everyone pays in insurance premiums to offset the cost of the fraud.1 DISB puts the scale at tens of billions of dollars each year across companies and consumers.2 You do not have to be near a fraud to pay for it, which is the practical reason honest claims matter to everyone on your street.
There is also a consequence for the person who files a false claim. Maryland's guide says a person who knowingly and willfully presents a false or fraudulent claim, or false information in an application for insurance, is guilty of a crime and may be subject to fines and confinement in prison.1 That is Maryland's wording, and it is a good reason to keep every claim honest and every application accurate.
Where to Report Suspected Fraud
Where you report depends on where you live. Here is what the official sources say for each place, and where they say nothing.
Maryland
Maryland's guide says consumers are encouraged to report insurance fraud activities to the Maryland Insurance Administration's Insurance Fraud Division.1 It adds that you need not give your name.1 You can call 800-846-4069 or file a referral form by mail.1
Northern Virginia
Virginia's statute establishes an Insurance Fraud Investigation Unit within the Department of State Police, in its Bureau of Criminal Investigation.3 The unit's listed duties include responding to notification or complaints alleging insurance fraud from police, agencies and any other person.3 It also reviews notices and reports of insurance fraud and selects the incidents that, in its judgment, need further detailed investigation.3
We did not find an official consumer hotline number for Virginia that we could quote word for word, so we are not printing one. Start by searching for the Virginia State Police Insurance Fraud Program, or ask your insurer's claims department how to make a report.
DC
DISB says you can file a complaint online at disb.dc.gov, by phone at 202-727-8000 or in person at its offices.2
Your Claim-Honesty Checklist
- Photograph first. Document damage before cleanup or repairs.
- Claim only what you lost. Do not round up a loss.
- Pay traceably. Check and card payments usually can be traced and verified.1
- Watch the deductible offer. Maryland's guide lists contractor deductible fraud as a type of fraud, so ask your insurer before accepting any deductible help.1
- Verify the license. Confirm the company is licensed before you sign.1
- Chase missing paperwork. No ID card or policy copy can mean unpaid premiums.2
Common Mistakes Maryland, Northern Virginia and DC Homeowners Make
- Adding a few extra items to a real loss "since the insurer expects it".
- Signing a contractor's claim paperwork before reading it or checking the license.
- Accepting a large cash deposit request because the crew "has other jobs lined up".
- Assuming a rock-bottom policy price is a good deal instead of a reason to ask questions.
- Ignoring a policy that never arrives.
The Bottom Line
Claim fraud is not only about staged crashes. In Maryland, the District and Virginia, the official sources describe it in everyday homeowner terms: padded claims, invented losses, contractors who work the claim instead of the house, and policies that are not what they seem. Keep honest records, verify who you are dealing with, and report what looks wrong to the agency that handles it.
Sources
- Insurance Fraud: A Consumer Guide — Maryland Insurance Administration
- Protect Yourself Against Insurance Fraud — DC Department of Insurance, Securities and Banking
- Insurance Fraud Investigation Unit (Section 52-37) — Virginia General Assembly, Legislative Information System