Hunton Insurance Recovery Blog

Even Real Housewives need insurance. Real Housewives of Potomac star Wendy Osefo, and her husband Edward, were recently indicted on charges of insurance fraud, among other charges.^[1] The housewife’s predicament is a cautionary tale for those with commercial and personal lines of coverage about the investigative tools insurers may use to investigate a suspicious or large insurance claim. In insurance, as in life, honesty is the best “policy.”

Background

As often is true in insurance, the facts matter; and specifically what is said in any kind of paper trail (including texts and emails) matters. The Osefos reported a burglary at their home to law enforcement, claiming a resulting theft of about 80 items, including designer purses, jewelry, and other luxury goods. Points of the claim raised suspicions, and investigators found the Osefos claimed a $200,000 personal property loss and filed allegedly fraudulent insurance claims claiming a personal property loss totaling more than $450,000 to three insurance companies.

The investigation also unearthed an email Edward sent to Wendy with an itemized list of items reportedly stolen in the burglary. According to investigators, in his email, Edward asked Wendy whether additional high value items could be added to the inventory. Edward’s email also stated: “I’m trying to get the total to exceed $423,000 which is our policy maximum.”

When insurers receive large or otherwise suspicious claims from policyholders, they are likely to launch a claims investigation, using a variety of tools to help validate the legitimacy and amount of a policyholder’s reported loss. As stated in policy endorsements, insurance fraud, like other kinds of fraud, is illegal and can be prosecuted; insurers argue that fraudulent claims can drive up the cost of insurance for everyone. The vast majority of claims submitted, of course, are legitimate and while subject to negotiation between the insured and insurer, are submitted by policyholders who seek the protection for which they bought the coverage. Policyholders can assist insurers in resolving their claims and maximizing their available coverage for a loss by practicing good recordkeeping, making accurate statements to insurers about a loss, and documenting any changes in the condition of items or premises claimed as part of a loss.

Key Takeaways for Policyholders

1. Practice Good Record Keeping: When making a claim, insurers want to see receipts, proof, timelines, and everything an insured has that can justify a policyholder’s claim. The Osefos claimed the theft of more than 80 items of jewelry and other designer goods, with a loss totaling over $200,000 in retail value. The investigators investigating the Osefos claimed $20,000 of the items that were reported as stolen by the Osefos had been returned to the store in which they were originally purchased for full refunds. Insurers will often examine invoices, purchase records, photos, and other documentation associated with a loss. Keeping records of costs, maintaining current inventories, and keeping photos of items or a premises can help policyholders obtain the maximum recovery under their policies.  
2. Verify Accuracy of Statements to Insurers: When submitting insurance claims, being as detailed as possible and in the form expected by insurers can assist insurers in the claims-handling process and expedite resolution, and payment, of the claim. For losses submitted under property insurance as in this Real Housewives example, using an insurer’s proof of loss form is ideal. As also shown in this example, however, “padding” claims or otherwise making written or oral misrepresentations to insurers about the cause of a loss and the damage incurred in a loss can result in denial of coverage for policyholders, policy cancellation or worse--criminal or civil penalties in extreme cases.
   Worse off is Edward Osefo, who allegedly gave recorded statements to two of the insurers about the inventory of stolen items he provided, and stated that none of these items had been returned. Investigators investigating the Osefos claim almost $20,000 of items claimed as stolen were returned to the stores from which those items were purchased for full refunds. Property insurance policies typically give insurers the right to conduct, as part of their claims investigation, an “examination under oath,” or deposition/sworn testimony. Having good records and a well-supported claim can help make the EUO go as quickly, and easily, as possible. Requests for EUOs should be prepared for as diligently and thoroughly as a deposition. 
3. Keep Track of Changes in Condition: In the event of a loss, changes in the condition of an item or premises can conflict with a policyholder’s previous statement(s) about those items or premises. For the Osefos, many items that were reported as stolen were allegedly returned. Further, according to the sheriff’s department, the investigation revealed the Osefos tried to make two claims for a diamond wedding band that was reported stolen in the burglary; however, as the investigation revealed, Wendy was later spotted wearing what appears to be the same ring in a photo posted on social media less than two weeks after the reported burglary.
4. Cooperate with Insurers During Their Investigation: When claims are large or suspicious to insurers, insurers may retain private investigators, third-party appraisal services, accountants, and other experts to help verify the statements made by an insured about a loss. Insurers can also use social media, surveillance, and store return logs to help verify or challenge an insured’s claims under the policy.
   As noted above, insurers often conduct EUOs as part of their claims investigation. Submitting to an EUO is generally considered part of the insured’s duty to cooperate with the insurer. EUOs are often used when an insurer has amassed conflicting or recognized information is missing during its investigation. Non-cooperation or incomplete cooperation with an EUO request can bar coverage for a claim, or even void a policy.

^[1] See TV’s ‘Real Housewife’ and Her Real Husband Charged With Fake Burglary Report, InsuranceJournal.com