6 examples of insurance fraud
Some of the fraudsters see insurance fraud as a harmless practice. There are many known example of insurance fraud, and you had better try to avoid such situations. After all, the consequences of committing insurance fraud are not insignificant. We distinguish various forms of insurance fraud, including:
- Lying or concealing information when applying for insurance
- Intentionally damaging objects
- Filing a claim for damages higher than actual damages
- Distorting facts or pretending damage is done
To clarify what insurance fraud can look like, below are six examples of insurance fraud.
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Example 1: Prior to claiming, increase coverage
A common example of insurance fraud is adjusting insurance coverage prior to claiming. Imagine the following situation: You have a hefty dent in your car because you accidentally collided with a pole. You have a third-party insurance policy with limited collision damage coverage. This means that the damage to your car is not covered. You quickly decide to change the insurance to full hull coverage. Only then do you file the claim with the insurer. Recovering existing damage from new coverage is not allowed.
Example 2: Concealing the truth or a white lie
It seems so innocent to cover up part of the story by not answering correctly a question asked by the insurer. What difference does one saying ''no'' instead of ''yes'' make either. However, the insurer wants to get an honest and complete picture of the situation. They therefore ask underwriting questions to decide whether to accept or reject an application. Lying or withholding some of the information damages the trust of the insurer. Misleading the insurer is considered fraud.
Example 3: Staging a situation
There have been cases where someone has staged a collision or burglary to rake in insurance money. The insurer then has to prove that it is a scam. This can be easy to prove in some cases. A staged situation can result in a large fine. The penalty can be especially high if you have endangered others in the staged situation.
Example 4: Labeling broken items as stolen
Accidentally breaking your phone is very annoying. Therefore, considering reporting it as stolen to insurance doesn't sound like such a bad idea. After all, a stolen phone falls under your contents insurance, which means you will be reimbursed for the damage. This is a common way to commit fraud. The same trick occurs with a broken laptop or car. The danger lurking here is that the insurer may investigate the ''stolen object.'' If this object is then simply found at your home, you are screwed. You are now classified as a fraudster with the insurance company. This brings unpleasant problems when taking out new insurance policies.
Example 5: Reporting more items as stolen than the actual number
Imagine that a burglar has been in your house. He has taken several items: your television and your IPad. It may then be tempting to pretend that a phone was also taken. Oh, and some jewelry was also lying around. Those must have been stolen too... This is also a form of fraud. The group of people this take advantage of such a situation are called opportunistic fraudsters.
Example 6: Claiming existing damage when reporting new damage
Imagine that a collision has left you with dents in your car. ''That's nice,'' you think: ''There are still some old dents in the car, I'll report them to the insurance company right away.'' This, too, is insurance fraud. You are taking advantage of an unpleasant situation. The dents were there before the collision, so they will not be reimbursed.
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