Insurance fraud is said to happen when individuals mislead an insurance company in order to get money for which they are not entitled to. It is considered to be as a serious crime. The most interesting feature in relation to insurance fraud is that many people think that they can rightfully commit the crime as they’ve paid high premium for years.
Types of insurance fraud
The common types of insurance fraud are discussed in the following lines.
• Health insurance fraud – A number of people take advantage of health insurance by complaining about certain diseases that are difficult to diagnose. By doing this, they claim disability insurance benefits so that they don’t have to work.
• Life insurance fraud – Many people purchase life insurance policies by hiding the information that they are suffering from life threatening diseases. Sometimes, a person fakes his/her death so that his/her beneficiary can enjoy the benefits.
• Travel insurance fraud – People often tend to over-value their baggage while filing insurance claim. A number of people pretend to be ill during their tour; with the help of a dishonest physician, they claim for medical treatment costs.
• Auto insurance fraud – One of the most common auto insurance frauds is planned accidents, where a person intentionally collides with an innocent driver, making it appear genuine. It is quite impossible for the insurance companies to detect whether or not the accident is genuine.
All the above insurance fraud can be classified under soft and hard frauds, which are described below.
- Hard fraud : It occurs when people unlawfully obtain money from insurance companies by a false injury or accident.
- Soft fraud : It happens when people either lie to their insurance companies or hide certain information for financial gain.
It is quite important to prevent insurance fraud as insurance companies lose a huge amount of money due to such fraudulent acts; as a result of which, you have to pay higher premium for your policies. Insurance fraud can be avoided only if everyone takes necessary steps to prevent it. Therefore, as soon as you sense a fraud, you should report it to the bureaus that investigate such fraudulent acts.