Insurance agents, applicants and policyholders may commit insurance fraud. There are many ways that this could occur. Having awareness of the types of insurance fraud could help you avoid committing these crimes or facing these types of accusations.
Additional coverage
Some insurance agents add additional coverage while claiming that it’s part of the policy. This causes the policyholder to pay more than they actually need for the type of coverage they requested. Agents must be honest about what the legal basic coverage is. Common add-ons that agents use in additional coverage fraud are accidental death coverage and motor club memberships.
Premium theft
When an agent asks a client to pay their premium directly to them, then this is most likely insurance fraud. It’s a strategy that fraudsters use to steal premiums. Agents may want to only have clients send their payments to the insurance company to avoid accusations of fraud.
Fraudulent insurance policies
Fake insurance policy fraud still happens. An agent from a legitimate company could sell a fake policy, or the company itself could be fraudulent. Insurance policies have to be in line with the law to be valid.
Application fraud
It’s illegal to lie on an application for insurance. A common way that applicants lie is claiming that they don’t smoke when they do.
Claims fraud
Policyholders commit claims fraud when they make a claim for a staged incident or an issue that never happened. Purposely injuring yourself or damaging your property, then filing an insurance claim is fraud. The possible legal penalties depend on the value of your claim. Higher costs tend to come with stricter punishments. Doctors, lawyers and other professionals could lose their licenses.
Insurance fraud is any form of misrepresentation during any part of the insurance process. It can occur when you’re filing an application, during your time as a policy holder or when you file a claim.
