6 examples of insurance fraud
There are countless examples of insurance fraud. However, some fraudsters do not view their actions as insurance fraud. It may sometimes seem like a minor, harmless offense. Still, it’s best to be careful, because committing fraud can have serious consequences. There are various types of insurance fraud, such as:
- Lying or concealing when applying for insurance
- Intentionally causing damage
- Claiming more damages than actually suffered
- Pretending injury or distorting the facts
To clarify exactly what insurance fraud is, we’ve listed 6 examples of insurance fraud below.
#1 Adjust your insurance coverage,before you file a claim
A clear example of insurance fraud is changing your insurance coverage before you file a claim. Suppose: you hit a pole and have a significant dent in your car. With your liability + limited comprehensive car insurance, damage to your own car is not covered. That’s why you quickly upgrade your coverage to liability + full comprehensive before filing a claim. Then, damage to your own car caused by your own fault is covered, and you receive a payout from your insurer. So you’re claiming an old damage under the new coverage.
#2 Lying or withholding information on an insurance application
It seems like such a small thing—answering “No” to a question you should really answer “Yes” to. However, the insurer asks these questions for a reason. An insurer wants to get a clear and complete picture of exactly who and what they are insuring. That is why they always ask a policyholder a number of underwriting questions before deciding whether to accept the application or not. An insurance contract is based on trust. If you withhold information or lie on your insurance application, the insurer cannot trust that you will adhere to the insurance rules. You are deliberately misleading the insurer in the hope that they will accept your insurance application. This is considered a form of insurance fraud.
#3 A collision or burglary in scscene
Another example of insurance fraud is staging a collision or a break-in with the aim of collecting insurance money. It is up to the insurer to prove that the incident was staged. In some cases, this is not difficult, for example, if a window was smashed from the inside or if there were accomplices willing to talk. Did you endanger other people by staging a collision or burglary? If so, the penalty could be more severe than you think.
#4 Report something that is broken as stolen
Did you accidentally drop and break your cell phone? If so, you might be considering reporting it as stolen to your insurance company. In that case, it would be covered under your home contents insurance, and you would receive compensation. We’re using a cell phone as an example here, but it also happens that a car or laptop is reported as stolen when it isn’t. If the insurer launches an investigation and finds your cell phone, laptop, or car right there in your home or garage, you’re in trouble. Because then you’ll be registered as a fraudster and will have trouble getting insurance in the future.
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#5 Report more items than were actually stolen
Suppose your home has been burglarized. A number of items have been stolen, such as a television and an iPad. It’s very tempting to claim an extra cell phone or some jewelry as stolen when filing your insurance claim. After all, the burglary has already happened. Unfortunately, this is a form of insurance fraud. People who do this are considered “opportunistic” fraudsters.
#6 Immediately claim a few old dents in your car when reporting car damage
A collision has left your car with several dents. There are already some older dents that you never had repaired. When reporting the damage , you decide to include all of the dents. Are you committing insurance fraud? Yes, because you are taking advantage of the situation for your own gain. Those dents occurred earlier, so you are not entitled to compensation for them.
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