Common Types Of Insurance Fraud
A misconception exists that insurance fraud is just a crime committed against insurance companies. Contrary to the belief, policyholders are indeed the victims of insurance frauds that come in different forms.
Although fraud is committed against the insurance companies, in reality, the companies do not absorb the losses because they recover them from their policyholders by increasing the premium costs. Insurance companies lose an estimated $30 billion every year, and they would declare bankruptcy if they did not find a way to recover the losses. The subject of insurance fraud cannot just be considered as simple as stealing money from a company. Fraudsters use various methods to cheat insurance companies of their money. Let us look at some of these common types of insurance fraud.
Most car accidents are cases an insurance fraud. Usually, the driver of the car and the victim are the only working on the fraudulent scheme. There have been cases where bystanders are also involved by giving fraudulent statements about the accidents. This ensures that the value of the car is highly inflated and the insurance pays off is nearly double the value of the car.
Health Insurance Billing Fraud
Healthcare professionals are not lagging behind in committing insurance fraud. Despite being involved in a respectable profession, they are not hesitant to recommend unnecessary procedures—which cost a lot of money—to their parents. A regular checkup with the doctor can result in an in-office surgical procedure bill for the insurance company. In this case, the victim is the patient of this fraudulent activity that takes place without his or her knowledge.
Abandoned House Fire
This is one of the types of insurance fraud that is commonly used by landlords and people who may need to relocate but are unable to dispose of their existing properties. Landlords could be having property in a neighborhood that is no longer popular and does not have any tenants to recover the money they had obtained as a mortgage. These people find it easy to burn their property and recover the money from the insurance company by way of insurance fraud. However, insurance companies are aware of this method, so they usually fire inspectors. This type of insurance fraud is prevalent and causes not just the premiums of home insurance to go up but also affects the entire neighborhood.
Criminals use any opportunity to commit insurance fraud regardless of the situation. For them, major storms are just another way to make some money. Homeowners enhance the value of their property and the belongings within to claim an exorbitant sum of money. They can even call in a claim despite there being no storm damage. In such a case, they work jointly with the inspector of the insurance company.
People who cause accidents often report the damages to the insurance company and even get an estimate for the repairs. They collect the insurance check for the damages but do not get the car fixed. This is the most common forms of insurance fraud, and those who commit it do not consider it as a crime. However, the regularity of these claims increases the pressure on insurance companies who have no options left but to increase car insurance premiums, affecting everyone.
Insurance fraud exists in various ways. Fraudsters are on the lookout for creative methods to commit insurance fraud simply because they believe that it is a victimless crime.
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