The Coalition Against Insurance Fraud estimates that nearly $80 billion in fraudulent insurance claims are made in the U.S. every year. Though this approximated value includes every type of insurance, it is expected to be less than the actual value because many fraudulent cases go undetected.
The FBI makes more than 600 insurance fraud convictions a year – with mortgage fraud being the most egregious offence. While the U.S. Insurance industry collects over $1.1 trillion in premiums every year, the estimated cost of fraud is nearly $30 billion every year, which creates a $200-$300 premium raise per family, per year.
To avoid adding to these astounding statistics, it’s important to understand the basics of insurance fraud as well as the various ways you can protect yourself from falling victim to a fraudulent crime.
What is Insurance Fraud?
Insurance fraud is any deceitful act made with the intent to receive improper monies from an insurer. Insurance fraud can be committed by anyone: doctors, lawyers, insurance agents, teachers, etc. Prosecution can fall on anyone who benefits from insurance companies in a dishonest, duplicitous manner.
What are the different types of Insurance fraud?
Though detecting insurance fraud can be difficult due to the furtive nature of the crime, if caught, individuals can face administrative action or even criminal prosecution depending on the type of fraud committed.
Law enforcements broadly categorize fraud into two different types, hard fraud and soft fraud.
· Hard Fraud: An accident, injury, theft, arson or other crime is committed deliberately, or faked, to collect payments illegally from insurance companies.
· Soft Fraud: Honest clients, who simply bluff to maximize their insurance claim, typically commit soft fraud, or “little white lies.” Though soft fraud is thought of as harmless, it is still a crime and offenders will still face the consequences.
How can you prevent Insurance Fraud?
Working with insurance can be a complicated, confusing process; especially when considering the various types of insurance like life insurance, auto insurance, health insurance, homeowners insurance, etc. Because there are so many variations of insurance, it’s important to know how to protect yourself and your insurance policies against fraudulent activities.
· Get a licensed agent: before signing any contracts or making any commitments, ensure your agent has a license for selling the specific insurance you need.
· Shop around: not all insurance providers will fit your needs. Compare policies and thoroughly investigate the company (including price quotes, policy descriptions, etc.) before agreeing to any terms.
· Know your coverage: evaluate your needs and wants out of any insurance policy. Do you want collision insurance for your car? Do you want extra coverage on your homeowners insurance? Not only can this save you money but it can also lower your chances of fraud.
· File factually: Though you may be a law-abiding citizen, misrepresenting facts is a commonly made mistake that gets many customers in trouble. No matter what, never file false or exaggerated information and always double-check to ensure your facts about property, health, etc. are all entered properly.
For more information on how to prevent insurance fraud, or to discuss reliable insurance plans for your needs, visit Insurance Center Associates, today.