Any act one commits to defrauding a natural insurance process is defined as insurance fraud. This results when a claimant tries to get some advantage for himself that he isn’t entitled to. Alternatively, it could happen when an insurer willfully does not pass on his client’s benefits that is due to the latter.
These days, fee churning, premium diversion, asset diversion and workers’ compensation fraud are among the most common of all insurance frauds. Here are the five largest types of insurance frauds you’re sure to know about:
Car Damage Fraud
There are several types of car fraud committed. One among them is when people report a minor accident and obtain car insurance quotes for it. Based on this, they apply for a collection of claims, pick up the check for it but do not have the car repaired. This is the No. 1 form of auto insurance fraud that happens time and again.
Homeowners Insurance Fraud
When an insured person submits an exaggerated claim on their homeowners’ insurance policy claiming damage to the house, they stand to receive a large compensation. This is a kind of fraud committed in this insurance sector.
Workers Compensation Fraud
By filing claims for injuries or illnesses never experienced, employees commit fraud. To claim disability payments, workers are also known to blow up the scope of their injuries. By deliberately wrongly classifying employees as independent workers, employers commit fraud against their employees.
Health Insurance Fraud
It’s not uncommon for patients to file a claim for services or treatments they never received. They do this by colluding with service providers and forging authentic patient information.
Phoney Policy Fraud
Yet another type of insurance fraud is the phoney policy fraud. This concerns scammers who pose as insurance agents who sell counterfeit policies to innocent customers and take the premiums for themselves. With the help of brand name recognition, they ask customers for direct or cash payments.
Also, there are many kinds of business insurance frauds that one must beware of. To be safe, speak to your agent whom you can trust.