An insurance fraud case in Saline County can serve as a cautionary tale for those having property insurance.
Saline County officials and Anti-Fraud personnel from the Kansas Insurance Department were successful in a court conviction in September against a Saline County woman for one count of insurance fraud. The conviction came after the woman plead guilty to taking cash upon returning merchandise she purchased as insurance replacements for items stolen in a burglary.
When a person has an insurance policy that covers the cost of replacing the depreciated value of the items stolen or damaged, then the money the insurance company pays to that person is expected to be used for purchasing the replacement items. Any other use of that money is contrary to the terms of the policy contract between the company and the insured person.
According to court records, the woman reported a theft from her home in Salina in August 2014 and filed a homeowners insurance claim with Allstate Insurance Company. In December 2014 Allstate stipulated that the woman purchase replacement items of no more than $3,648, which was the depreciated value of her belongings. She was then to turn in the purchase receipts of those items to the company for reimbursement.
The woman made six purchases of items, totaling $3,157. However, according to the court report, she returned those items within three hours of purchase on each occasion, pocketing the money, but she still sent the receipts to Allstate. Allstate questioned the discrepancies, and the insurance department anti-fraud unit stepped in.
Following her guilty plea, the woman was ordered to pay a $500 fine and almost $500 in court and administrative fees. She was sentenced to 30 days in jail, but that was suspended to six months’ probation. Among other conditions, she was to spend 48 hours in jail or complete 50 hours of community service.
This is just one example of the type of fraudulent activity the insurance department’s anti-fraud unit deals with on a daily basis. Our staff takes cases like this seriously because they effect insurance policy owners through higher premiums and increased claims activity. We urge all Kansans to be alert to potential scams.
Ken Selzer, CPA, is the Kansas Commissioner of Insurance.