Insurance fraud isn’t something you usually think about, but it is an expensive crime. Expensive in terms of how much it costs not just in losses to the insurance companies, but also to you in the form of higher premiums charged by insurance companies to make up the losses.
A conservative estimate of the overall cost of insurance fraud per year is approximately $80 billion. This is fraud in all kinds of insurance. Property-casualty insurance fraud constitutes about $34 billion per year.
What is insurance fraud, anyway? It is deliberate deception of insurance companies by insurance holders in an effort to get money the insurance holders don’t deserve.
Insurance fraud can occur at several different points in the transaction of insurance. People who apply for insurance can attempt to defraud the companies. Policyholders can also make the attempt. Third-party claimants or professionals who provide services to policyholders can attempt to defraud the company.
Even agents and employees of insurance companies can commit insurance fraud.
Some of the ways people try to commit insurance fraud include padding or inflating the amount of damage to property or injury suffered. People can also commit insurance fraud by not being honest on their applications. Claiming injuries or damage that never occurred is another way of committing insurance fraud. Staging accidents is also insurance fraud.
Insurance fraud is an effort to convince the insurance company that the submitted claims are legitimate or at least are not worth investigating further. The insurance companies have to decide where the cost of further investigation is worth the effort or if it is better to just let the claims go through.
Insurance fraud is classified as either hard or soft. The hard type of insurance fraud is easier to detect. People who try to convince insurance companies that submitted claims are totally true when they are a hundred percent false. It only takes a little investigation most of the time to discover the truth about these claims.
Soft insurance fraud is more difficult to determine. When people submit claims that are inflated, this is soft fraud. The reason this type of insurance fraud is so hard to refute is that there is an element of truth in the claims.
If a person commits insurance fraud, the least that can happen is his or her insurance will be canceled. They will also find it much more difficult to get insurance again from any insurer.
This information about insurance fraud has been brought to you by Corriveau Insurance Agency. We’re an independent insurance agency in Nashua, NH. We’re a family owned business since 1912. Call us for a review of your insurance needs. Call 603-883-5528 today!