A new study found that insurance claims submitted for damaged HVAC units were overpaid by 65%. That includes claims submitted during the first half of 2011. The study found that many insurance companies were paying for entire units to be replaced when minor repairs would have done the job just fine. “Our research found that the average claim submitted to insurance companies was the result of a homeowner being told by an HVAC company that their unit was in need of a full replacement, when in actuality, a minor repair would bring the system back to pre-loss condition,” stated Damon Stafford of HVAC Investigators, the company responsible for the study in a news release. “It becomes a self-fulfilling prophecy … homeowners experience an issue, contact a local HVAC contractor, and in turn unknowingly file a fraudulent claim. That’s in essence how the game has worked for the past 30 years.”

Insurance fraud is the second most costly white-collar crime after tax evasion. That’s according to the Insurance Information Institute. Insurance fraud totals more than $29 billion a year. The National Insurance Crime Bureau says that fraud causes insurance premiums to increase by nearly $300 every year per household. For many insurance companies, it’s cheaper to pay the claim than to hire professionals to seek the truth.

HVAC Investigators assists with investigating heating and air conditioning claims. They diagnose the damage and make a recommendation of whether replacement or repair is needed. “We’re excited about the positive impact we’re having on the insurance industry,” Stafford remarked in a news releaes. “We realized several years ago that the HVAC property claims were on a dangerous trajectory, and fraud was taking its toll. When carriers understand that they can save, on average, somewhere between $3,000 and $4,000 per claim, they begin to grasp that this is something they should be paying attention to. It’s important, and everyone we come into contact with ‘gets it.’ It’s very rewarding work.”

For those people looking for a way to reduce their car insurance, home insurance or other insurance premium costs, you may want to look at your credit report. Your credit report is not often thought of as having a link to your car insurance needs, but it is, in fact, one of the biggest and best tools for you to use to get a lower cost. The reason for this is your insurance provider’s need to know how risky it is to work with you. Some companies are using credit reports to determine risk factors related to car insurance.

What’s The Link?

What could be the link between credit scores and insurance premiums? Many car insurance providers, home insurance providers and even some other insurance companies use credit scores to determine how much of a risk you are to them. If you are a new customer with a company, for example, the company will likely pull a credit report on you to determine what type of a borrower you are. Here’s why.

• If you have a higher credit score, research and evidence points to you having, most likely, smaller car insurance plans.
• If you have a lower credit score, evidence shows that you are more prone to having more car insurance claims.

The two may not seem like they should be linked, but in fact they are. This information on the link between credit history and claim filing is one based on research from the various car insurance companies. They looked back at drivers over a period of time and found a link between these two factors. In short, those drivers who have good credit scores are also better drivers.

What You Can Do

How will your credit report affect your application with an insurance company? The fact is, that depends on what is on your credit report. If you have not done so yet, get a free copy of your credit report at AnnualCreditReport.com (the only, government-authorized site for accessing your free credit report from each of the three largest credit bureaus.) Then, ensure it is up to date and accurate.

It is also a good idea to be a good credit user. Make your payments on time. Ensure you pay down debt and live within your means. By doing these things, you not only boost your ability to manage your credit debt, but you also may end up with a lower car insurance premium or house insurance premium as a direct result. If your credit score goes up, do not expect your car insurance company to automatically reduce your premium, but you can call the insurer and ask for a better rate.

In April of 2008, the state of Massachusetts introduced its drivers and auto insurance providers to a new system of “managed competition.” Now, at the end of August 2008, there seem to be few issues with the system. Motorists and auto insurance providers alike remain quiet. For Massachusetts Insurance Commissioner Nonnie S. Burnes, no news is, it appears, good news.