Ethics

Homeowner collects $700K from ins. co. to repair his fire damaged "2nd home".

HO lives in another state....Collaborates with a "restoration contractor" in his home state, to establish the $700K claim & settlement.

Through the original "general contractor:, (out of state, may not have even seen the project), hires a local alleged contractor to "supervise" the work, who, in turn hires another local contractor to perform and subcontract the work...All parties paid in cash.

The owner has collected $700K

HO will give original contractor aprx. $400; The project will cost aprx. $200k to complete.

The original GC and the "local" GC will divvy-up aprx $200k....

The HO pockets $300K, then will "short-sell" or let bank forclose on....

This involves two states that have NO contractor licensing, (TEX & Colo.),....GO FIGURE!

WTF????

I think you guys are all jumping to conclusions without any factual evidence.

All policies are not written the same. I don't see any insurance companies turning over any monies without their checks and balance systems in place. It might be that the insurance company has to write that 700k check no matter what happens. The assertion that the insured MUST replace their property is flat out wrong. The insured can take the money and do whatever they want with their property....and that includes bulldozing it.

Theres not enough facts offered to form a definite opinion. Lets see the contracts. Lets see the small print. After that, we'll be able to determine if there is insurance fraud or mortgage fraud.

That's insurance fraud.

"...can legally bulldoze the property and pocket all 700k..."

Let's drag out any homeowner policy and read the fine print. You'll never find that in there, I guarantee it.

It's fraud.

"... has agreed to pay 700k if there is a loss."

Not quite. They have only agreed to pay 700K if there is a 700k loss. The odds of a loss are spread across a wide field of insureds, most of whom will have no losses and some of whom will report legitimate losses. The other policyholders are now going to be making up the difference between the actual loss and the fraudulent claim. The ethical position is that the insurer has a fiduciary responsibility to verify the actual loss and that it was not deliberate. You pay me a 750k premium for a 700k maximum loss and I'll look the other way while you drive your bulldozer anywhere you want. If you burn me for 300k and I can't prove it, I'll just take it from all the other rate-payers next year, one piece from each one. Kind of like a lottery only you have to cheat to win it. I'm probably smart enough to pull off that kind of thing, but I don't want dirty money. No love in it. Just another pie-eating contest.

TomB Said: You & I get screwd....I dont think ther ins. co. has profited $700K from the ins. premiums its collected on the property....

Oh brother!....Theres a typical case-in-point for ya!

Do you think the insurance company wasn't charging the proper annual premiums against that 700k liability?! Do you think they were charging as though their exposure was only 200k?

You & I get "screw'd"....I don't think ther ins. co. has profited $700K from the ins. premiums it's collected on the property....

Oh brother!....There's a typical case-in-point for ya!

Who's getting screwed in the deal?

The insurance company has been taking premiums and has agreed to pay 700k if there is a loss. The homeowner can legally bulldoze the property and pocket all 700k. That's not only legal, but ethical.

The bank requires that the insurance payout goes through them to make the property whole. If it's made whole, they pay out the 700k.

The big question is: how much is owed? If there is enough equity, then the bank wins too.