Understanding Insurance Fraud

Many people don’t realize what goes into insurance fraud. A common misconception is that this is a “victimless crime” but that’s not actually the case. Not only do the insurance companies take a hit, but depending on the type of insurance fraud, so do the other drivers that follow the rules of the road. Due to insurance fraud, these drivers get higher insurance rates. There are numerous forms of insurance fraud. Fraudulent activity can be anywhere from lying about details in order to get a lower insurance rate to filing a fraudulent claim, and everything in between. It is important to understand what insurance fraud is so that you can make better decisions!

Your Responsibility

Oftentimes, people do not like paying for car insurance because there is no guarantee that it will be used. If you are financially unstable, this may be one of the first bills that you get rid of. However, that shouldn’t be the case. It is important to remind yourself that car insurance is kept in case of an accident. If you want to find more affordable rates there are free comparison tools available online that can help you see if you can reduce costs while still being covered.

Common Instances of Car Insurance Fraud

- Not disclosing all drivers of the vehicle

- Changing the car’s address

- Mileage used by the vehicle/driver

While people may forget or accidentally provide inaccurate information, there are also people who do it on purpose. Unfortunately, either way, both are instances of insurance fraud even if you did not mean to lie. Your car insurance carrier can deny claim coverage and even cancel your policy if the find out about your misrepresentation. This would mean that even though you spent all the money in order to be prepared for a claim was wasted. If you aren’t sure of your information when talking to your insurance company then hang up and callback when you do. It is important that you have the necessary accurate information.

Faking Documents

If you are caught directly falsifying documentation, then there are some pretty serious penalties associated with that. Some people dislike paying for car insurance so much that they fake insurance documentation in order to still have proof without actually having insurance. It is easy to get caught when doing that and you can face a large fine as well as potential imprisonment. However, there are other cases of insurance fraud that are even worse.

Criminal rings are organized groups of people that participate in insurance scams. They will file numerous false claims which get them a lot of money. These types of criminal rings typically consist of businesses like body shops or crooked doctor practices. While there are many types of insurance fraud, the more common one is false medical claims. States that feel these fraudulent cases more than others are “No-Fault” states. These states experience more fraudulent medical insurance claims because they normally don’t go through the court system, so they are less likely to be caught.