Insurance Fraud

How to ensure your loss claims are paid

Insurance fraud is usually said to occur when someone knowingly lies to obtain some benefit or advantage to which they are not otherwise entitled.

Insurance companies pay out large amounts of money to people who knowingly commit fraud by filing false claims. People sometimes will commit insurance fraud feeling that they are only going after the multinational insurance companies. Nothing could be further than the truth. Insurance fraud hits ordinary consumers like you and me right where it hurts.

Our insurance premiums go up because the insurance companies are not in the business of losing money. They pass the losses on to their policyholders. Insurance fraud is a crime for which, one way or another honest consumers and businesses pay the price. Insurance fraud increases insurance rates for all of us.

Insurance fraud examples:

  • When people intentionally misrepresent material facts and circumstances to an insurance company to benefit and receive compensation for a claim they would not be entitled to if the truth was known.
  • There have been cases where people deliberately fake accidents, injury, theft, arson to collect money from the insurance company.
  • There are times when fires are set to collect insurance money.
  • Damage or destruction of property is willfully caused to collect insurance money from insurance companies.
  • Faking a bodily injury to collect insurance money for loss of wages is another form of insurance fraud.
  • Homeowners make claims for items such as stereos, televisions or other expensive equipment that they never purchased and cases where homeowners inflate claims for items.

What is being done about insurance fraud?

Insurance companies are investigating suspicious insurance activity. Those caught committing insurance fraud are not dealt with leniently. Insurance companies are seeking prosecution to let the public be aware that insurance fraud cannot be condoned. Ensuring that they obtain restitution of all insurance money that has been paid out fraudulent insurance claims.

Tips for consumers

1. Create an inventory of your home’s contents. This inventory should be periodically updated. Do this at least once a year.

2. Photograph and videotape your possessions and home.

3. Save receipts of large purchases. In case of fire or theft, insurance companies may want a sales receipt to confirm you actually owned that expensive laptop or television that you claim was stolen. It is always a good idea to have receipts.

4. If you have expensive jewelry items, get them appraised for insurance purposes.

5. Keep your photographs for insurance purposes, copies of receipts etc in a secondary location so that in case of a fire they will be protected. If you have a safe deposit box in your bank then that is the best place to keep such documents.

Most insurance policy requires you to prove your loss. Having an inventory of your household goods with receipts and photographs is the best way of providing such proof. In case you do not have receipts and your home has been damaged. Photographs of the damaged items should also help in settling your claim.