Most Common Insurance Frauds, How Not to be a Victim

Every year billions of insurance frauds have been reported. It is an intended crime that takes place because of the wrong intentions of people for having more financial gain. According to the law, the act of insurance fraud can be prosecuted when

  • The suspect had the aim to cheat and the prosecutor have to prove with evidence that the suspected person is  involved or committed an act to defraud
  • An act of misrepresentation ( oral or written is completed).
  • The intent and act must come together. One without the other isn’t wrongdoing.
  • Misfortune related to real money is not mandatory as long as the suspect has committed an act and had the intent to commit the crime.

In simple words, insurance frauds also include those wrongdoings in which people provide false information to insurance companies for financial gain and they are not obliged to get it if the truth had been told. 

For example, If you buy a house owner insurance plan that covers the services for damage to your house due to any natural disaster. You make a false claim and represent a false picture of your home destruction to get that amount from the insurance company. Such an act is accounted as insurance fraud. 

Who Commits Insurance Frauds? Insurer or Policy Holder?

Who Commits Insurance Frauds? Insurer or Policy Holder?

When you think of insurance fraud, the first idea that clicks in mind is that “ the fraud committed by insurance companies is called insurance fraud”. Well, this is not the actual scenario. In the real world, insurance frauds are committed by both insurers and policyholders. 

Insurance agents also deceive people in a variety of ways including extra charging of services or charging for services that are not actually or billing the client double the actual cost. etc

Policyholders also scam the insurers by making false claims and presenting a false picture of their financial loss to get benefits from insurance plans for their selfish means. 

Types Of Insurance Frauds

Types Of Insurance Frauds

The most common schemes of insurance fraud are listed as follows. 

1. Auto 

  • Misleading or expanded robbery fix guarantee
  • Proprietor “surrender” (misleading taken vehicle report) “Bounce in” (somebody not in the vehicle at the season of mishap)
  • Arranged mishap
  • Deliberate harm guarantee
  • Distorting the date or conditions of a mishap to get inclusion
  • Rate avoidance

2. Homeowner

  • Inflated or false property damage
  • Inflated or false or inflated burglary or theft report
  • Arson
  • Intentional damage claim

3. Health care

  • Charging for unprovided services.
  • Charging for a more expensive service than what was actually provided
  • Offering and charging for unnecessary services while representing that the services were necessary
  • Twofold billing

4. Disability and Life

  • Fake death claims.
  • Misrepresented recipient claims.
  • Counterfeit disability claim.
  • Presentation of forged reports to proceed with a disability claim.

5. Industry./agent

  1. Theft of premiums
  2. Unlicensed or potentially unapproved movement
  3. “Churning Falsifying data to a shopper with an end goal to inspire them to utilize the money worth of a current strategy to purchase a new, generally more costly arrangement

6. Workers Compensation 

  1. Working while enjoying all the benefits of workers’ compensation
  2. Claiming fake injury
  3. Claiming to be get injured at the workplace while injury occurs at a place rather than workplace 
  4. Manager under-revealing finance or potentially the number of representatives to get a lower premium
  5. Misclassifying employees’ job codes
  6. Employees neglect to carry laborers’ remuneration protection

How To Avoid Insurance Fraud?

How To Avoid Insurance Fraud?

As we previously mentioned that insurance fraud is not only always attempted by the policyholders but insurance companies are involved in a large number of cases. As a consumer, you must know about your rights and be well aware of the whole procedure to stay safe from any type of scam. Here are some tips that will help you to detect any susceptibility to scams and take the right step.

1. Do Not make a hurry in purchasing any insurance plan

You should purchase the first policy that you find. Instead of this you have to ask different companies for quotes and policies, compare their coverage and price, and then select the best fit for you.

2. Be cautious in all your dealings

When you are making a purchase and dealing with an insurance agent, you must be very clear about your concerts and ask him and everything that is doubtful to you. Be straightforward in all your communication and dealings. You can ask your agent to provide you with each and everything in documented form with complete endorsement. 

3. Complete your homework

Whenever you feel the need to buy an insurance plan, you have to do some homework before contacting any insurance agent. You must gather info about the best insurance companies in your town, their packages, term, conditions, etc. When you meet any insurance broker, You have to check the credibility of that insurance agent as well. 

4. Maintain Your Records in a Safe Place

Maintaining an insurance record on your own is a mandatory requirement. You have to keep the duplicate copies of all statements, policies, and receipts covered in plastic coverings in a safe place. 

5. Do Not Pay In Cash

As a general rule, insurance agents cannot ask you for cash. Payments are made through cheques. For ensuring that your cheque is for the right account you can verify the account number with customer care service and confirm the banking details. 

6. Try not to Reveal Details of Your Policy

Uncovering subtleties of your strategy records to an obscure outsider is a certain fire approach to drawing in protection extortion cases. At times, a fraudster could act as an insurance specialist, getting some information about your contract. They can either posture to be shopper freedoms staff or profess to call you from the help focus of the protection supplier. Assuming they call and inquire as to whether you have any grievances about your insurance contract, you ought to be on the high alert.

Final Note

This article provides a summary of the different types of insurance fraud as well as tips to avoid becoming a victim of such scams. By understanding the different types of scams and being aware of the warning signs, you can protect yourself from becoming a victim of insurance fraud.

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