Quick Guide: Insurance Fraud

Quick Guide: Insurance Fraud

Insurance has become such a commonplace expense in life that most people treat it as a trivial routine. It’s easy to rummage through and blindly sign coverage policies without completely understanding them. Besides, with such busy schedules, who has time to comb through every word in a bulky contract? It may be quicker just to get things over with and sign your papers, but ignoring due diligence can also make you susceptible to carrying out insurance fraud. There’s no need to risk this problem when companies such as Adriana’s Insurance Services readily provide trained agents to help navigate the red tape of proper coverage. We understand the ins-and-outs of insurance and are prepared to help prevent our clients from entanglement in fraud.

What is Insurance Fraud?

Insurance fraud is defined as any act of deception which is carried out with the aim of acquiring unjustifiable compensation from an insurer. This may sound like a clear-cut regulation, but insurance fraud is a crime that is full of grey areas. People often find themselves unintentionally caught up in fraudulent activity purely because of misinformation or ignorance. Most cases of insurance fraud involve people who seek payment for injuries or losses that they never actually incurred. However, it’s also possible for ordinary customers to end up as targets of counterfeit coverage, or as pawns used to embezzle revenues generated from insurance premiums.

Always Stay Informed

This is why it’s important for consumers to try and become as informed as possible about any insurance policies they subscribe to. It all starts with selecting an insurer who is transparent and willing to clarify any questions about the process of insurance. It also demands a basic understanding of how to detect and avoid acts of fraud as an individual.

In general terms, insurance fraud is classified along two categories: Soft Fraud, and Hard Fraud.

Soft Fraud:

Soft fraud, which is the type of fraud that most people unwittingly get involved in, refers to small-scale cases in which claims are filed for damages that did not occur as stated. Soft fraud itself is complicated because it can happen accidentally. Something as seemingly harmless as filling out the wrong date on a form can end up creating the impression of deliberate exaggeration of damages. The most common examples of soft fraud are:

  • Inaccurate application form/contract entries.
  • Filing multiple simultaneous claims for a single incident.
  • Filing claims for damages that are unrelated to an incident.
  • Inaccurate estimation of damages and repairs.
  • Exaggeration of medical billing.

Hard Fraud:

Hard Fraud refers to complex cases of fraud in which groups of people conspire to embezzle money by taking advantage of loopholes in the insurance claims process. Hard fraud is always intentional, and can even involve complicit consumers who are willing to participate in dishonest activities to carry out this crime. Common examples of hard fraud include:

  • Staging accidents.
  • Filing claims for false damages.
  • Filing claims for false injuries or false disability.
  • Identity theft.
  • Falsely reporting vehicles as stolen.

The biggest and most important precaution to avoiding involvement in fraud is simple – honesty. When accidents happen, your highest priority should be to recuperate, not capitalize on the opportunity to receive reimbursement for your damages. Aside from being honest about your damages, making sure to work with a reputable insurer is another important step towards protecting yourself against fraud. To learn more about this and other insurance-related topics, give Adriana’s Insurance Services a call at 1-800-639-765 or stop by any of our offices for a free policy evaluation – regardless of whether you purchased through us or not!