Insurance Fraud happens when a person or entity makes false insurance claims to obtain benefits they are not entitled to. There are many forms of insurance fraud, but they are all considered serious crimes. Insurance fraud happens with every type of insurance. Sometimes criminals will report incidents that never happened; other times they exaggerate the costs. Some criminals will even stage accidents just to collect the payments.
Auto Insurance Fraud can involve staging an accident or injury, but this isn’t the only example of this crime. Misrepresenting facts like the value of your car, the number of miles you drive or your driving history are all considered auto insurance fraud.
Just as with auto insurance, Home Insurance Fraud can involve staged incidents where criminals report losses that never occurred or falsifying information when you purchase insurance.
Insurance fraud is classified as either hard or soft. Hard insurance fraud involves staging incidents of theft, accident, or injury to collect unauthorized payments. Soft insurance fraud is when someone exaggerates otherwise legitimate claims to collect a larger payment then you are entitled to. It can also include lying when you purchase insurance to get a lower premium.
Insurance fraud is a serious crime, and we all pay the costs. According to the FBI, this costs the average American family up to $700 per year. To recover the cost, insurance companies raise premiums for everyone.
Criminals who are found guilty of insurance fraud are subject to penalties under both federal and state law. These penalties may include sizable fines and even jail time.