Don’t lie to insurers: the consequences can be dire

11 September 2017

“There’s no such thing as a ‘bit of a lie’ when it comes to insurance,” says Insurance & Financial Services Ombudsman, Karen Stevens. “This includes, for example, telling your insurer you had a bigger, better, newer TV, phone or laptop. Don’t do it. It’s not worth it.”

“Often people do not appreciate that the consequences of lying can be dire,” says Karen. “Claims are declined, and the flow-on effects include cancelled policies and names registered on the Insurance Claims Register – and this can affect any future insurance which, in turn, can affect home or business ownership.”

Over 22 years, the IFSO Scheme has investigated a multitude of cases involving varying degrees of dishonesty. “The current New Zealand law makes a distinction between situations where someone makes a fraudulent claim or is dishonest,” says Karen. “But the bottom line is, tell the truth; fraudulent or dishonest claims are more serious than most people think.”

When investigating complaints involving fraud or dishonesty, the IFSO Scheme looks at the policy, and whether the insurer has been able to provide evidence to the legal standard. “Some claimants ask to have their names removed from the Insurance Claims Register,” says Karen, “but if the insurer has correctly declined the claim or avoided the policy, we can’t give claimants what they want and it will affect their future insurance.”

For example, Joe* said the amount EQC paid him out for his damaged Christchurch house wasn’t enough to cover the repair work he’d had done before the house was further damaged. Joe provided repair invoices in the names of five different people totalling $91,500, but he later admitted he’d written the invoices himself as he’d done the repair work and didn’t have invoices. Joe’s claim was declined on the basis of fraud, his policy cancelled, and the insurer sought to recover the payments it had already made to Joe.

“More generally, if you claim for bigger, better, or more valuable versions of what you actually had stolen or damaged, it is regarded as being dishonest and the insurer is entitled to decline your claim,” says Karen.

IFSO Scheme tips:

- Take care to always give correct and accurate information
- When in doubt, find out
- Don’t tell lies, be flippant, or guess
- Understand the consequences, both for the claim and broader future consequences.

*Not real name