Insurance fraud takes place when a person or entity attempts to gain a benefit from an insurance policy that is not actually owed to that party. While insurance policy holders most commonly commit acts of insurance fraud, insurance fraud can be committed by insurance companies, and in some cases outside parties. Insurance fraud is a concern for every type of insurance that is available.
Insurance Fraud Cause
The main reason that insurance fraud is committed is for financial gain. To achieve this gain through insurance fraud, insurance companies may deny legitimate claims by tricking policy holders or using vague wording in contracts. Outside parties may commit insurance fraud by deceiving property owners into making a deposit for repairs or by submitting claims to an insurance company for services that were not rendered. Most commonly, however, it is insurance policy holders that intentionally damage property or overinflate the value of items in to receive financial gains.
Types of Insurance Fraud
Insurance fraud is classified into two main types, hard fraud or soft fraud. In acts of hard fraud, damage is intentionally done to a tangible object, structure, or individual in order to file an insurance claim for the damage. Soft fraud is much more common and usually involves falsification of documents, such as exaggerated claims.
Property Insurance Fraud
Homeowners’ insurance fraud and business insurance fraud are some of the most common types of insurance fraud. These types of fraud may be committed by property owners or insurance companies. Property owners may destroy the building or structure, cause damage, inflate the value of damage, or make a claim for damage that never occurred. In some cases, policy holders intentionally take out a policy for more than the property is worth in order to receive higher gains. Insurance companies may leave policy wording vague in order to deny claims that are filed, or may deny claims that are valid in hopes that the denial will not be disputed.
Following the occurrence of natural disasters, unethical individuals may convince insurance policy holders that a property insurance company requires a deposit prior to repairs being made. These individuals may even do some repair work in order to obtain the payment. In many cases, these individuals are difficult to locate after payment has been made.
Automobile Insurance Fraud
There are several ways that automobile insurance fraud can be committed. Staged collisions occur when an individual or group sets an unwitting party up to collide with a vehicle, then claims the most amount of damage possible against the person’s insurance. As with property insurance fraud, individuals may also cause damage to a vehicle or exaggerate damage or injuries that have occurred. Automobile insurance companies may also deny valid claims by using deceptive wording or other unethical means.
Health Insurance Fraud
Health insurance fraud is often committed by health insurance companies, but can be committed by policy holders or health care facilities. Health insurance companies may deny valid claims, cancel policies to avoid payment of claims, or provide policy holders with misleading information about coverage. Policy holders may commit insurance fraud by failing to disclose pre-existing conditions, failing to inform caregivers that an injury was work related, and exaggerating symptoms in order to obtain unnecessary prescription drugs. Providers may commit insurance fraud by billing the insurance company for services that were not rendered, charging more than standard for services, and convincing patients to undergo unnecessary procedures.
Other types of insurance fraud that may be committed to obtain financial gains include:
- Application fraud
- Workers’ Compensation fraud
- Life insurance fraud
Insurance Fraud Defense
Those that have been accused of committing insurance fraud should contact a lawyer that specializes in the area of insurance fraud as soon as possible. Insurance laws are complex, and any party that stands accused of insurance fraud may benefit significantly from having the help of an expert. Insurance fraud lawyers make it a priority to be aware of the most current laws and standards that may benefit defendants.
“Insurance Fraud.” FBI. U.S. Department of Justice, 17 Mar. 2010. Web. 23 May 2014. <http://www.fbi.gov/stats-services/publications/insurance-fraud/insurance_fraud>
“Types of Insurance Fraud.” Types of Insurance Fraud. Insurance Fraud Bureau of Massachusetts, n.d. Web. 23 May 2014. <http://www.ifb.org/ContentPages/TypesOfFraud/TypesOfFraud.aspx>
“Welcome to the Division of Insurance Fraud.” Division of Insurance Fraud. MyFloridaCFO.com, 1 Jan. 2012. Web. 23 May 2014. <http://www.myfloridacfo.com/Division/fraud/#.U39LrHYfMdU>