Insurance fraud is a criminal offense that is often under-rated in the insurance industry. When an insurance policy is misused, it has severe consequences to society as a whole. The major problem in the cases of insurance fraud is that most of the people do not know how to recognize it. Some people are not aware that they might be a part of a fraud racket or a victim of insurance fraud. Therefore, people must know how to identify the different types of insurance fraud.
Insurance fraud can range from a staged accident to an exaggerated claim of a theft or robbery. The two common types of fraud are:
False claims for damages: Some policies will provide claims for damages for specific reasons only. For example, comprehensive car insurance does not cover damage from collision. A person might state another reason for damage to the car to get coverage from the comprehensive policy. Cheating with wrong intentions is insurance fraud. Unintentional cheating is not insurance fraud.
False claims for injury: These types of insurance fraud are prevalent and are also the easiest to commit. Faking an injury after an accident is very easy for people. For example, a person might claim injury coverage for back pain or sprain after an accident. These types of claims cannot be cross-verified or denied quickly. Hence, agents and carriers need to look out for false claims for injury.
False or inflated claims: False claims or exaggerated claims are when a person tries to get money for a loss that has not happened. Also, when a person increases the loss amount to get extra money, it is an exaggerated claim. For example, a person’s house might have suffered a loss due to fire that amounted to much less than the request made. Stating extra damage is an inflated claim.