Home Insurance: Reasons That Can Void Your Insurance Policies
It is raining outside with very strong winds. You are aware that a tornado is coming your way but you dare not move an inch. Carefully you count all of your material possessions and keep your list in a tightly sealed envelop and place it in a cabinet. Suddenly with a sudden force, BAM! Your house was shredded into pieces as the tornado crosses your lawn. Luckily, you were able to hold on until the tornado disappeared. Your house was a mess, but you didn’t care. You knew that it will all be paid by your insurance company since you have tricked them in giving you a policy by lying in your application. You are awfully wrong!
For cases like the one stated above, this is known as material misrepresentation and is the worst of all types of cancellation. In this case, you lied something about your application which enabled you to get the policy that you wanted. If the company ever finds out that you lied, you will be in a very big trouble. Not only that they can cancel your coverage without your consent, they can cancel it too at their own time, which means that they can trick you to paying the premium while all the while they won’t really cover for you. When something bad happens, you will cry with all your heart because they will declare the void and never cover for you.
Insurance companies have ways in beyond our imaginations that can unearth even the most well kept secrets of our life (as long as insurance matters of course). Even though it sounds absurd, they can really know if ever you did try to deliberately damage an item just to get your insurance coverage for it or have it replaced with a new one. This is one ground in voiding or canceling your coverage. These are called fraudulent claims.
Another type of fraudulent claim is when you declare a price of a certain item way much too higher than it really is. Insurance companies have surveyors or investigators who are usually experts in terms of item appraisal and would know if your claim is valid or not. Once they find out that you are overpricing on it, then they can opt not to pay out on you also.
In cases of fire or flood, when the coroner is much too suspicious of the source or the reason of a fire, then it will move the insurance company to investigate for arson. This is a rather common case of insurance fraud that many people have decided to burn down their “old” house just to get the insurance money and they will relocate or build on a “new” one.
Insurance companies will be very suspicious of you also if they find that there are rather “too many” claims on a certain policy. This would eventually force them to dispatch their investigators and check if these claims are really valid.
Honesty will always be the best policy, and this holds true for insurance. If ever your policy will be voided due to material misrepresentation or fraudulent claim, you will be branded as moral hazard and you will have very little chance of acquiring insurance again.