Insurance fraud is when someone deceives their insurance company for financial gain. There are many different types of insurance fraud but most can fall into two categories:
Hard Fraud: Hard fraud is when someone premediates and causes a "loss" that they will file a claim on to get the insurance payout. An example of this is someone causing damage to their own home deliberately to be able to file a fraudulent claim.
Soft Fraud: Soft fraud is a little more complicated because it is not premeditated and is based on a legitimate claim. An example of this is a person gets in a car accident and over exaggerates their injuries for financial gain. This type of fraud is more difficult to spot as the claim itself is legitimate, it is just being blown out of proportion.
Other common types of insurance fraud:
False Claims Fraud: False claims fraud occurs when a policyholder fabricates or stages an incident to file a claim that never actually occurred. Examples of fraudulent claims include deliberately causing a car accident or faking one's death to collect a life insurance payout.
Identity Theft: Identity theft is often used to obtain healthcare benefits illegally. This occurs when an individual uses someone else's identity to access medical treatment or prescription drugs.
Inflation/Exaggerated Claims: Inflation or exaggerated claims fraud involves inflating the severity or extent of damages in a claim to receive a larger payout. This can happen in various situations but is most common during natural disasters.
Independent insurance brokerage located in Tempe, AZ. We offer auto insurance, homeowners insurance, life insurance, renters insurance, commercial insurance…
Disclaimer: Coverage will vary on state, insurance company, and type of policy.
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Information credit: https://www.progressive.com/answers/insurance-fraud/
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