Insurance fraud is a crime. And it costs all of us.
Any act committed with the intent of fraudulently receiving payment from an insurance company is considered insurance fraud. Misrepresentation or omission of material facts when applying for insurance is also considered insurance fraud.
Insurance fraud occurs with every type of insurance - including auto insurance, homeowners insurance, and renters insurance. And it's more than just reporting something that did not occur -- it is exaggerating the consequences of what did, or even going so far as to stage an incident in order to collect payment illegally.
In the case of auto insurance fraud, staging an accident, an injury or exaggerating the financial consequences are all examples of the crime of insurance fraud. Misrepresentation or omission of material facts when applying for auto insurance is also considered auto insurance fraud.
In the case of home insurance, fraud occurs when a burglary is staged, or if loss or damage to covered items is reported and that loss never occurred. It is an example of insurance fraud that occurs with homeowners insurance, renters insurance and condo insurance.
The insurance industry has defined hard insurance fraud as those activities that involve planned or staged incidents of theft, accident, or injury in order to collect payment. Soft insurance fraud is considered exaggeration of otherwise legitimate claims for purposes of collecting a larger payment than otherwise due. It also includes misrepresenting information when obtaining your insurance policy in order to benefit from a lower premium.
Filing fraudulent claims is a crime. And it costs you money. How?
The FBI estimates the total cost of insurance fraud (excluding health insurance) is more than $40 billion per year.1
In order to cover payout of these fraudulent claims, insurance premiums are increased. Based on the FBI estimates, insurance fraud ends up costing the average U.S. family between $400 and $700 per year in higher premiums. That hurts all of us.
Those who commit insurance fraud are guilty of a crime. They are subject to both state and federal prosecution, depending upon the circumstances.
For more on reporting insurance fraud, contact the National Insurance Crime Bureau (www.nicb.org) or your local authorities.
1 https://www.fbi.gov/stats-services/publications/insurance-fraud Accessed 16 Apr. 2021
©2021 National General Insurance. All Rights Reserved.