Suppose you (an eee-vil person) own something of some significant value (house, car, piece of art, jewelry) that you really don’t care to own any longer, and don’t want to go to the hassle of trying to sell. You decide you would much prefer its worth in cash, so you arrange for its accidental loss/destruction. Oh, but why settle for once? Can you insure the same thing with Acme and Best and Capital and Deluxe insurance companies, and collect from all of them? Do insurance companies have some sort of automatic information exchange to keep this from happening?
Short answer, yes, companies have ways to track this down.
First, it’s difficult to even get multiple insurance policies from different carriers on things that are licensed or otherwise part of some public database, like homes or cars. And it’s also more difficult (although not impossible) to get homeowners insurance from one carrier and then insure separate personal property with another. Not all carriers will cover your art if they aren’t also covering the home it’s contained in.
But you’ll really run into issues if you try to file multiple claims. Carriers exchange information about claims. For example, there is a database called the Comprehensive Loss Underwriting Exchange (CLUE) where carriers report personal auto and property claims and can find if you’ve filed similar claims in the last 7 years. It’s primarily used to set rates on new policies, but it can also help them find fraud.
TroutMan is correct. Add to that, eee-vil person may end up paying twice the premium for no increase in the settlement amount because the insurance companies will each make pro rata payments on the agreed amount of loss based on Insurance Agreement and Guiding Principles. Plus, if the companies can show it was eee-vil person intent to deceive and collect twice, they may claim fraud and eee-vil person may end up with a zero offer from each company. This eee-vil person might prevail in court with a counter suit but only to the extent of collecting for the agreed loss, not a 200% settlement and eee-vil person is still faced with legal out of pocket expenses. It’s basically a lose-lose situation.
Drat, foiled again! Why do they make it so hard for us, uh, morally flexible folks to rip off the system?
Need answer fast?
Back in the old days, like the 70s and 80s, you could do this with medical insurance. The way things were set up, you would pay out of pocket, you’d submit your claim to the insurance company, and they would reimburse you. If you had two policies both of them might reimburse you for the same claim. These days your provider typicall submits the bill to the insurance company rather than you doing it.
And of course you can have more than one life insurance policy.
This was the premise for a P.G. Wodehouse story:
https://standardebooks.org/ebooks/p-g-wodehouse/ukridge-stories/text/ukridges-accident-syndicate
Oh, follow up on @TroutMan’s excellent answer, the sort of behavior you mention (likely along with the evidence) are red flags to insurance companies (speaking as a now longish ago car loss adjuster) of a fraudulent loss. For that matter, at the company I worked for, all TLS (Total Loss) vehicles that didn’t result from a collision had a specialty team, because they were elevated for that reason as well.
“My car was stolen.” - was a police report filed? Any other large claims recently? Etc.
“My car caught on fire.” - as above, how/where did fire starts, anyone witness?
And so forth. And if there’s evidence of fraud, many (possibly most) companies and jurisdictions require that the local police be notified.
So you may end with zero payment, a note on your record of probable or proven insurance fraud, dropped coverage with prejudice -for- insurance fraud if proven, and criminal charges from the police in absolute worst case scenario.
I spent a 6 month span in the 90s working on insurance systems and my one big achievement was to integrate our systems with what was at the time called The Index Bureau.
Every morning we would send a formatted flat file with all of our claims from the previous day, following a very detailed record format (what today would probably be XML). Other insurance companies were uploading their claims throughout the day as well–the Index Bureau was a central fraud detection service.
They would apply all kinds of matching rules (not unlike credit card companies’ fraud detection rules) and an hour later we would receive a list of all of the hits on our claims, along with the details of the other claims that were matches.
For example, imagine that Joe Schmoe files a claim with company A for a slip and fall at Home Depot, then files a different claim with company B as “Jim” Schmoe for a slip and fall at the same Home Depot on the same date, this information would be sent both to us and to the other insurance company.
We would then provide the “hit” to the insurance agent who was working the claim and they would take it from there.
This was in the days before many privacy regulations, so every morning I would scan through the hit list coming back (hundreds of hits) to see that was all in order, and I would see many interesting claims and kinds of potential fraud.
Years ago my house was struck by lightning. In addition to having to have part of the roof repaired, I filed a claim to replace some electronics damaged by the resulting power surge (I had a “full replacement value” policy). When my policy was coming up for renewal I decided to shop around for a cheaper policy. I found one and went through the process of not renewing my existing policy and signing up for the new one. Then I got a letter from the new insurance provider telling me that they were declining the new policy because of “prior claims filed” on the property. Note that the total amount paid by my insurance for the damaged electronics and roof repair was under $2000.00. In the letter it stated that in order to approve the claim they needed me to show that I had taken action to prevent a recurrence of the event that caused the damage. I was tempted to ask them if this meant I needed to file a restraining order against God to prevent future lightening strikes, or to sue Mother Nature for reimbursement of the damages caused.
A few years ago I watched a TV documentary on insurance fraud. It was no surprise to find that a very large proportion of claims for lost/stolen/damaged property are inflated. Apparently, insurance companies employ a lot of people whose sole purpose is to root out the fraudsters and in general, they start from the premise that 100% of all claims are inflated.
Examples were given: the claimant who lived in a small, poorly maintained house, who had been burgled, and had a police report to prove it. They thought it unlikely that the claimant would have owned a plasma TV, Bose hi-fi system and a collection of expensive watches, without having kept receipts. People coming home from holidays abroad and claiming for expensive stolen cameras or iPads, again with no evidence of ever having purchased said items, were given short shrift.
The index bureau still exists (actually, there are now several, but the biggest is ISO).
I have multiple insurance policies from different carriers on my life. I am part of a public database.
I’m sure you understand the difference between life insurance and property insurance, but apologies if that wasn’t clear. I don’t think the OP was talking about faking his death.