Profitting From A Buildings Repair Insurance Claim

jamesd

acbleeds wrote: »

I would like to know where he stands on this, whether he is being fraudulent

Insurance fraudster. He's only entitled to the cost of putting the property back into its proper condition. You'd be a co-conspirator in the fraud. If you go ahead, just how do you plan to prove that you weren't in on it from the start?

Some customers you shouldn't risk doing business with. This is one of them. He's already stealing from his insurance company, what's he going to do to you?

Tell the insurance company that you're not taking the business. If you don't want to shop him directly either refuse to say why or tell them that far too much work has already been done for it to be sensible for you to do the rest and refuse further comment. Either should be sufficient for them to wonder about the actual cost of the work.

vaio

mikey72 wrote: »

It's ok until the homeowner makes another claim, or maybe tries to sell, or until the building inspector shows up. Then any possible incorrect or substandard work could be blamed on the op, or fraud brought up.......

If the OP isn’t doing the work then I don’t see how any of that could be a problem for him

acbleeds

Hi and many thanks for everyone's advice. To try and calrify a couple of peoples questions... Yes the insurance company did eventually send a surveyor in to assess the cost of repair and they came in about £8,000 less than my quotation but after discussions with the insurance company, it was clear they had not allowed for some items and when we went through it all, they came back with virtually the same figure as my quote, hence we were given the go ahead. I would assume however they have agreed a figure because that is deemed to be the cost of repair and in my mind I would have thought that the policyholder is perfectly entitled to use another contractor if he wishes, but if they are cheaper, surely he must inform the insurance company of this and repay them the difference?

Secondly, the work he has had done is not what you would call 'sub-standard, it is in fact being done to what appears to be a very good finish as you would expect for a property of this value (approx £2 million I believe), so he wont have any issues regarding sub standard work, nor would I therefore have this problem come back on me.

As I see it, he is committing fraud for the fact he is knowingly proffitting from the claim (please advise me if I am incorrect in this fact). The way I would like to proceed is one of 2 options:

1. I totally dismiss his option to 'pay me off' and suggest he brings all the works being carried out (and those already done) under my control and the sub-contractors working effectively are working for me and I work out all their CIS contributions etc for the work they have already done as well as then the work still to do moving forward. Hence I will be in control of the project as the insurance company are expecting and make my actual profits etc on the job across the period it takes.

2. If he refuses to effectively bring this project into line and make it 'legitimate', then again simply totally dismiss any offer of payment and simply say that I will not be implicated in any kind of fraud and that I believe by simply walking away and saying nothing I could be implicated (because I provided and negotiated the quotation that enabled him to get the money), therefore I believe I have a duty to inform the insurance company that the policyholder has not awarded me the work and as such, leave him to fend for himself (and I'm sure they would have big question marks about his claim if it became apparent I was not doing the work).

Thanks again for all your advice, it is being most helpful.

vaio

Auntie-Dolly wrote: »

I can't imagine the insurer would pay out £60000 without their own assessor seeing the damage. Perhaps they have arrived at their own figure & the homeowner has accepted this & arranged their own repairs. Submit your invoice for the work you have done & leave it at that.

Just what I was thinking. On a £60k claim there is no way the insurance are going to pay out on the basis of one quote and no site visit.

So, the insurance company are happy, the policy holder is happy, the OP is not as he was expecting the work but that’s the nature of quoting, some you win, some you lose and in this case at least the policy holder is being upfront and offering to pay for the OPs time and effort.

vaio

acbleeds wrote: »

Hi and many thanks for everyone's advice. To try and calrify a couple of peoples questions... Yes the insurance company did eventually send a surveyor in to assess the cost of repair and they came in about £8,000 less than my quotation but after discussions with the insurance company, it was clear they had not allowed for some items and when we went through it all, they came back with virtually the same figure as my quote, hence we were given the go ahead. I would assume however they have agreed a figure because that is deemed to be the cost of repair and in my mind I would have thought that the policyholder is perfectly entitled to use another contractor if he wishes, but if they are cheaper, surely he must inform the insurance company of this and repay them the difference?

Secondly, the work he has had done is not what you would call 'sub-standard, it is in fact being done to what appears to be a very good finish as you would expect for a property of this value (approx £2 million I believe), so he wont have any issues regarding sub standard work, nor would I therefore have this problem come back on me.

As I see it, he is committing fraud for the fact he is knowingly proffitting from the claim (please advise me if I am incorrect in this fact). The way I would like to proceed is one of 2 options:

1. I totally dismiss his option to 'pay me off' and suggest he brings all the works being carried out (and those already done) under my control and the sub-contractors working effectively are working for me and I work out all their CIS contributions etc for the work they have already done as well as then the work still to do moving forward. Hence I will be in control of the project as the insurance company are expecting and make my actual profits etc on the job across the period it takes.

2. If he refuses to effectively bring this project into line and make it 'legitimate', then again simply totally dismiss any offer of payment and simply say that I will not be implicated in any kind of fraud and that I believe by simply walking away and saying nothing I could be implicated (because I provided and negotiated the quotation that enabled him to get the money), therefore I believe I have a duty to inform the insurance company that the policyholder has not awarded me the work and as such, leave him to fend for himself (and I'm sure they would have big question marks about his claim if it became apparent I was not doing the work).

Thanks again for all your advice, it is being most helpful.

If the claim has been paid on the “full & final” basis and for a figure that is reasonable then I don’t see where the fraud is? And I’d say you can’t force the policy holder to use you particularly as the work is far advanced.

Even if you could then the practicalities of it make it a non starter. Just two instant top of the head thoughts…….Retrospective CIS payments? Don’t fancy trying to sort that one out, sounds like a good way to clear a site in my opinion. What about the quality of the work done so far? Whose responsibility is that?

On the pricing, in the OP you said that the policy holder would be pocketing at least £40k out of a total of £60k yet in this post you seem to be saying that the standard of work is good & what you would expect. Something doesn’t sound right there.

acbleeds

It has not yet been paid in 'full and final', they've issued him a £10k advance deposit that I asked for from the insurance when I thought I was doing the work to pay for materials and initial labour etc etc and were then going to issue 25% payments upon me producing the interim invoices for this amount of work, but the policyholder told me at our metting that he was unhappy they had not just paid out in full and was going to chase them to do so and expected he would be successful (he has a lot of business with them as owns many businesses which are insured etc with them).

The CIS payments wouldn't be retrospective, theoretically, I am the only one that knows they have done any work yet, so them invoicing me would be at the current date so to speak. They may not be happy about this because I know most of them will currently be receiving cash in hand, but that's tough as far as I'm concerned.

One of the reasons the value he will be pocketing is so high is because the cornices are very ornate and the supply of those and their decoration was over £20k of my quote alone (and I wasn't adding a penny of profit on that, this was from an external specialist and I felt I couldn't add anything to it) and as you've probably already guessed, he's decided not to put cornices back. My profit, excluding contingencies for what I expected to be approximately 3 months work was about £16k pre tax etc. He wants to pay me £10k to 'walk away' and do nothing, but I fear I am party to a fraud if I do, hence do not see this as an option.

vaio

If he does manage to get “full & final” as agreed then where is the fraud? If he saves money by not doing cornices then that will result in devaluation of the property which is his choice.

If he doesn’t get “full & final” then the insurance will only pay on production of invoices so he’ll only get paid what he’s spent (and can prove he’s spent).

Of course the CIS will be retrospective (assuming the subbies have been paid something already), as I said above, expecting them to hand back 20% of what they have been paid is a non starter in my world, far more likely they’ll walk, I would.

Sounds like he’s doing the project management himself and it’s reasonable he gets paid for that, I’d take the £10k and walk away (although that does sound suspiciously high for preparing a £60k quote, I’d have thought £2-3k would be plenty).

Doubt the insurance will be interested unless you have concrete evidence of some wrong doing, making unfounded allegations could well come back to bite you in terms of your future relationships with the insurance, this client and the subbies. You could get a name as a trouble making grass throwing a strop because you didn’t get a job you’d quoted and although I’m sure you’d sleep at night knowing you’d done the “right” thing sometimes pragmatism is a better way of putting food on the table and paying the bills.

zzzLazyDaisy

My only experience of making a claim with the CIS was that they did in fact agree a cash settlement on a full and final basis. In this case it was for a damaged antique grandfather clock which a carpet fitter had knocked over when manouvering the carpet into the house and smashed it to smithereens, literally. We couldn't find anything to replace it with, so valuations were made and CIS gave us a cash settlement (they later successfully reclaimed the money from the carpet fitter's insurer).

We never replaced the clock as it was, to us, irreplaceable. I think we spent the money on a holiday. However this was not fraud, as there were no strings or conditions attached to the cash settlement.

This may, or may not, be the case with OPs customer.

acbleeds

I agree, I don't understand why he would want to pay me £10k if he knows he is doing nothing wrong? I don't normally carry out work for this insurance company (or any really), it was at the policyholder's request because I have done quite a bit of work for him last year and I'm not one of his 'own team' that he pays cash in hand to, so there is not relationship to ruin with the insurance company, or the subbies as non of them are ones i've ever used and weren't planning on using them because the policyholder had told me not to use the people he knows when I was preparing the quote. Obviously it would probably ruin the relationship I have with the policyholder and I know there is further work to do in the future, but don't think that outweighs the risk of this?

I've read up some articles on the financial ombudsman website about 'exaggerated claims' which this seems to fall under and I really am beginning to think it's straightforward fraud because he is increasing the insurers liability beyond what it would otherwise be and therefore they would not pay out and cancel his policy if they found out. I just want to be absolutely sure for obvious reasons.... If the guy is willing to pay me £10k and it's legitimate for him to do so, I don't want to walk away from this with nothing other than wrong assumptions.

2sides2everystory

Doesn't smell too good this one does it?

It's a very old-fashioned concept of "indemnity" that the policyholder is self-administering here which of course does not sit well with his insurance contract.

It even makes us wonder about how the original damage occurred.

Let's assume the damage occurred completely fortuitously, and it would be at the insurer's option under the contract to make a "full and final settlement" if that's the way negotiations were to go. It seems that didn't happen and that it suited both parties that the OP's skill and knowledge was used to persuade the insurer that the property was being meticulously reinstated so that a pure indemnity would result (policyholder would be put back in exactly the same position as before the damage occurred including being able to enjoy his ornate cornices in situ as opposed to spiriting them into his bank account).

If it isn't strictly kosher, sounds like a novel way of asset stripping a once loved property, doesn't it? Or maybe it is a new way of money-laundering - you take dirty money, buy ornate cornices, then at a time to suit your palate, pour on water, tell insurer you are reinstating and then ... ah ... that's where you need an assistant ... the OP.

What we have heard about in this story is how greed plays out. Yet I would hesitate to actually call this one fraud in public i.r.o. the policyholder's actions so far. We all know what we think, but proving it? What we do know is that if it had played out with the use of interim invoices etc. and the insurer found out then the OP would be in more trouble than the policyholder.

So the OP must have no further involvement by provision of any documentation, especially any documentation he knows to be false.

If the policyholder does as he expects negotiate a full and final settlement now with the insurer then I guess that is up to him and the insurer. We can guess that lies might be told as part of the negotiation as they are in commercial negotiations everyday, and that the OPs name might even be woven into these

It is then simply a question of how the OP wants to run his business and his life. Does he shine a beacon on behalf of the rest of us and risk whatever wrath descends upon him or does he keep schtum and await his reward?

This is the stuff of village legend and the talk of the local pub. We know what most people would say with a few beers in them, but we also know what they would do unfortunately: Let he who is without sin cast the first stone etc., live and let live ... ??