What is Insurance Fraud?
When we’re getting to know you and providing a quote, we’ll ask questions about you, your lifestyle and the items or investments you own and are looking to insure. A general understanding of fraudulent practices within the realm of insurance, based on this concept, would mean lying when answering these questions.
Car Insurance: making sure the correct ownership, model, and address are communicated clearly will help save any trouble when making a claim.
Common types of fraud in car insurance are:
- Staging collisions to submit exaggerated injury or damage claims to different insurers to avoid detection of the fraud, often in collusion with another person
- Purposely making a false claim for damage that wasn’t caused by an accident or medical treatment that wasn’t actually provided
- Inflating a legitimate claim by overstating damage or making a theft claim for property not actually stolen
- Choosing not to disclose aftermarket add-ons or customizations done to your vehicle that may impact your payout or eligibility
Homeowner’s Insurance: if the heating or structure of your home is misconstrued in order to obtain a lower premium, fraud can occur if your home is being insured incorrectly.
Common types of fraud in home insurance are:
- Overstating the value of stolen items in the event of a home burglary claim
- Lying about the extent, cause, date or location of damage to your home
- Staging a break-in and faking the theft or damage of property
- Asking a vendor to “cover your deductible” by increasing their estimate or bill
- Purposely concealing that a residence is used as a rental or in a commercial business in order to get cheaper insurance rates
Other types of insurance fraud include:
- Disaster Fraud: after a natural disaster, high volumes of claims are made, and personnel are unavailable to investigate every claim—this results in substantial payouts, sight unseen
- Agent & Broker Fraud: an unethical agent or broker stealing and pocketing your premiums without your knowledge, or sliding extra coverage you don’t need or want into your policy, increasing the premium and their commission
- Faked Death: taking out a large life insurance policy and faking your death in order for your beneficiary to receive the insurance payout
Committing insurance fraud can result in serious consequences like unemployment, high premiums and even criminal convictions or jail time.
Insurance fraud not only affects yourself, but causes problems for insurers in that they incur costs in investigation (resulting in higher premiums for honest clients too). Insurance is there to help as a financial fallback in times of uncertainty, so taking steps to ensure you’re not committing fraud helps benefit you, your insurer, and the community!