Consumers are being warned about the wide-ranging consequences of insurance fraud after a man faces the prospect of losing his home for a fraudulent claim against his car.
Mikey, whose name has been changed, made a claim after the Auckland flooding event on January 27 2023 for damage to his car.
He provided a quote from his mechanic for the cost of repairs but his insurer wrote the car off instead, notifying Waka Kotahi NZ Transport Agency to deregister it.
Mikey then moved to withdraw his claim and said he had already fixed the car himself while waiting for the insurer to get back to him.
Upon investigation, the insurer discovered the mechanic's quote for repairs was from January 13, before the floods.
The damage in the assessment was also not consistent with damage caused by flooding and was more likely related to wear and tear.
Mikey became uncooperative with the investigation so the insurer declined the claim and put a flag on his name in the Insurance Claims Register (ICR).
Mikey's house and contents policies, which were held with another insurer, were then cancelled due to the flag on the ICR.
"He's now facing the possibility of the bank withdrawing the mortgage because he can't get insurance for his house," said Karen Stevens, the Insurance & Financial Services Ombudsman.
Mikey wanted the flag removed from the ICR so admitted to lying about the claim, but the insurer instead updated the flag, making it clear his claim was declined due to fraud.
Stevens said insurers have the right to cancel a policy and put a flag on the ICR if a customer has deliberately misled their insurer.
"Mikey made a complaint to us about being put on the ICR, and said his insurer lacked empathy because he was going to be ruined financially. However, insurers have clear policies regarding fraud, and it makes no difference if someone withdraws their claim or apologises for making a false statement," she said.
If consumers are flagged on the ICR, insurers will do their best to steer clear of them in the future.
"People don’t realise that if they are flagged on the ICR, the policies they hold with other insurers can be cancelled too, and all insurers will steer clear of giving them any new insurance from that point on," Stevens said.
"It's vital to always tell the truth to your insurer, as the consequences are just not worth it."
The IFSO Scheme resolves complaints about insurance and financial services, and its service is free for consumers. People can make a complaint to the IFSO Scheme at www.ifso.nz or by calling 0800 888 202.
