We recieved insurance payment as should be – had a few things come up and cannot pay cleaner all right now?? Is this fraud or what can happen?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Sep 21, 2012

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Insurance Question from Dutchtown, IA

Asked on 09/21/2012

We recieved insurance payment as should be – had a few things come up and cannot pay cleaner all right now?? Is this fraud or what can happen? We had a house fire - recieved full payment for cleaning services. Some unexpected things arised. We told the cleaning services we can only pay part of the cleaning services & then make payments. They said they want a particular amount or they will turn it in. That this is fraud. Is this insurance fraud? What can happen??

Answer given on September 26, 2012

If you had a fire loss under your homeowner insurance, the insurance company usually pays the vendor, in this case the cleaning company, directly. Since your insurance company decided to make the payment directly to you, you are responsible to pay the vendor for their services.The fact that you had ” a few things come up” so you spent the money owed to the cleaning company, does not exonerate you from the debt to the cleaning company. They have the right to expect prompt payment for their services. They can turn you over to a collection agency to get their payment. You really did not have the right to spend the money that was due the cleaning company. Those funds were intended for the repairs to your property due to the fire claim.The cleaning company can make a report to the insurance company. It’s not clear what could come of that report. It is possible that the insurance company will non-renew your insurance, or they may not get involved at all.

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