The Most Common Types of Insurance Fraud

Questions to Ask Your Insurance AgentInsurance is a must, not just a luxury, to keep ourselves and our property protected. However, it’s a shame when something that’s used to provide people with a sense of financial safety and security is used by scammers as an opportunity to make, or rather steal, money from innocent people.

  • Car Accident – The next car accident you see could just be another ploy to make money off insurance. The driver, victim, insurance investigators and even some of the bystanders that give statements are in on the fraud. The value of the vehicles is greatly inflated and the insurance payoff is for two totaled vehicles.
  • Health Insurance Billing Fraud –  Sometimes fraudulent health care providers bill health insurance companies a high fee for a standard procedure, or to bill for services that were never rendered. For example, you may go in for a regular check-up but your doctor decides to bill your insurance company for an in-office surgical procedure that never happened.
  • Staged Home Fires – This can be done in one of two ways. The homeowner either removes important family items before the fraud takes place, or the homeowner makes sure that the insurance company knows the value of the expensive items and then has them destroyed.
  • Faked Death – A criminal will take out a life insurance policy on himself and make his spouse the beneficiary. After the policy has been in effect for several months, the insured criminal fakes his death and his spouse is paid the death benefit. When the funeral is over, the spouse suddenly disappears and the insurance company is out the death benefit.
  • Storm Fraud – A common form of fraud that happens in the wake of major storms is homeowners will either enhance the storm damage to their home to get more of a settlement, or the homeowner will take advantage of how busy the insurance company is and call in a claim even if there was no storm damage.

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