Insurance Fraud
Insurance fraud involves the obtaining of a payout from an insurance company through fraudulent claims which aren’t firmly identified. There are two types of insurance fraud—soft and hard fraud.
Soft fraud involves the exaggeration of an existing legitimate claim. This may be in the case of a car accident whereby the driver claims that the damage to their taillight was as a result of the accident when in actual fact it was not. As such, the insurance company is forced to pay for the replacement of the taillight. On the other hand, hard fraud involves the making up of a situation which would result in the issuance of a payout by the insurance company. Such created claims may be on paper—where, for instance, a doctor claims for services which he did not provide—or in reality, whereby a homeowner burns down their own home and claims a payout.
Spotlight on Insurance Fraud
About Insurance Fraud
Insurance fraud negatively impacts consumers due to the higher premiums that insurance companies charge as a way of compensating for the money they lose due to insurance fraud. When processing insurance claims, insurance companies employ certain algorithms for purposes of detecting insurance fraud. As such, when you submit a claim, their computers analyze it for any indication of fraud. In the event that any red flags are raised, your case is then referred to a claims adjuster or an insurance expert who will conduct further analysis seeking to determine the validity of your claim. If thereafter the company still feels that your claim may be fraudulent, they may hire an investigator to conduct further investigations to collect enough evidence in order to support their denial of your claim.
The types of insurance fraud include property insurance fraud, life insurance fraud, auto insurance fraud and health insurance fraud. Common claims investigated for insurance fraud include automobile collisions, automobile property, medical, life, workerís compensation, property and fire. Each type of insurance fraud has its own specifics. For example when it comes to medical insurance fraud, the insurance company will investigate victims of a suspicious slip or fall; inflated or falsified billing by medical facilities or workers; food contamination whereby a foreign object is found in food or drink products; inflation or falsification of bills by pharmacists or pharmacies; inflation or falsification of bills by dentists or dental offices; and disability claims submitted while the claimant is on permanent or temporary disability and is receiving benefits, or is reported to be working or performing activities that exceed the alleged physical limitations.