The Big Motors fraudulent insurance claims scandal has caused a stir in the public, but similar problems are occurring in the real estate industry.
The elderly are mainly targeted, and many cases have been reported to the Consumer Affairs Agency and local government consultation centers.
This time, we will introduce specific examples and countermeasures for fraud problems that involve recommending repairs using fire insurance.

Big Motor's fraudulent insurance claims case

The Big Motors fraudulent insurance claims case has been covered in the news every day.
The company was found to have damaged customers' cars and punctured tires, then fraudulently claimed insurance money for the repairs.
In addition, cases have been discovered in which legitimate repair costs were inflated and unreasonably high insurance claims were made for repairs.

One of the reasons for the problem is said to be that policyholders leave everything to the repair company without dealing directly with the insurance company.
Since customers had no interest in the cost of repairs because their insurance money was paid, and they left the troublesome procedures to the contractors, there was no stopping the rampant fraud.

The rapidly increasing use of fire insurance to sell building repairs

Something similar is happening in the real estate industry.
There are many cases where people have trusted salespeople who claim they can use their fire insurance to repair their buildings free of charge, requested repairs, and then ended up running into trouble later.
Recently, building repairs due to storm and flood damage have been on the rise, and this business scheme is taking advantage of this trend. In some cases, you may unknowingly be helping a scam, so you need to be very careful.
Let's look at some specific problem cases.

Problems with false and inflated insurance claims

There have been some malicious cases where people propose repairing roofs or gutters, then carry out unnecessary repairs and make false or inflated insurance claims.
In this case, the salesperson started by offering to carry out a free building inspection after the typhoon, and once specific repairs were found, they recommended that the costs be covered by the fire insurance money.
If you leave it to a contractor because it's free, they may end up including repair work that wasn't actually necessary, or they may be charged an inflated amount for the work.
In this case, you are making a false statement to the insurance company in order to claim for compensation.
It cannot be denied that there is a possibility that not only the contractor but also the building owner, who is the insurance policyholder (beneficiary of the insurance money), may be seen as complicit in the fraud, so this is a case that must be avoided at all costs.

Problems regarding cooling off and penalty fees

There have also been reported cases where people have become suspicious of suspicious sales practices and requested a cooling-off period for the contract, only to be unable to do so or to be charged large penalty fees.
According to the Consumer Contract Act, you can exercise the cooling-off period for contracts concluded through door-to-door sales within eight days from the date of receiving the written contract.
However, because you don't want to get into trouble with the contractor, you may end up just leaving it to the contractor to decide what will happen.
However, if you leave it to them, there is a possibility that it could develop into a problem of false or inflated insurance claims, so you must negotiate the cooling-off period with determination.

Insurance claim support fee trouble

There have been cases where people have been charged high fees of 30 to 40% of the repair work cost, or even hundreds of thousands of yen, under the guise of insurance claim support fees or consulting fees.
It seems that they sold the business by saying that the insurance payout would exceed the cost of repair work, and that the fees would also be covered by the insurance money.
There are some malicious companies that only file insurance claims and then openly sell themselves using lies such as "You are free to use the insurance money however you like."
Fire insurance claims are made by the policyholder to the insurance company, and there is no fee charged. In addition, when making a claim, an estimate for repair work is required, and the insurance payout will never exceed the estimate.

Tips to avoid getting into trouble

We must take a firm stance against malicious sales tactics that target the elderly and people with disabilities.
It is important not to worry alone, but to seek advice from your family or a public institution.
Instead of just accepting the sales pitch, take a moment to think things through calmly and then take appropriate action.

Check the repairs without leaving it to the contractor

When requesting building repairs, it is important to check the repair areas together with the contractor and determine whether repairs are truly necessary.
If the location is difficult to see with the naked eye, you can have a photo taken on the spot so you can check it.

If you are unsure whether repairs are necessary, consider getting other contractors to look at the property and provide you with comparative bids.
There have been cases where, after having multiple contractors check the property, it was discovered that no repairs were necessary, and the customer was able to exercise their right of withdrawal.

Don't blindly believe sales pitches that promise free repairs

Whether or not you will actually receive insurance money is determined based on a variety of documents, so it is not guaranteed that you will be able to claim the amount stated by the repair company.
In some cases the full amount will be reimbursed, but it is not uncommon for only 60% or 70% of the repair costs to be reimbursed.
Once you have received an estimate of the repair costs, we recommend that you consult with your insurance company to find out how much you will be covered by insurance.

Check the contract and terms carefully

When requesting construction work, be sure to carefully check the contract and terms and conditions, and ask the sales representative to explain the breakdown of the price, payment schedule, construction period, and any cooling-off periods in case of an emergency.
There are some companies that simply hand over a quote without signing any written agreement, but it is out of the question to hire such a company.

Even if the contract stipulates exorbitant penalty fees or prohibits the use of a cooling-off period, it may be possible to terminate the contract without penalty.
If you are unsure, consult with a lawyer or other professional or a public institution.

If you come across any suspicious sales, contact us immediately

When entering into a construction contract, it is important not to think about it alone, but to always consult with family and acquaintances around you.
If you calm down and think about it, you may realize that what the salesperson is saying is wrong.

Unscrupulous businesses use a variety of methods to sneak up on you in an attempt to gain unfair profits.
This is not going to disappear in the future. It is a good idea to check in advance for consultation services to avoid being scammed or getting into trouble.

If you encounter any such suspicious business practices, you can contact the National Consumer Affairs Center of Japan or your local government's consumer advice center.
If you don't know where to go for consultation, you can call the Consumer Hotline 188 (Iya-ya!) and they will be able to direct you to the appropriate consultation center.

If you take precautions in advance, you won't have to worry about malicious sales tactics.