Insurance fraud occurs when someone knowingly files an application or claim containing false, incomplete or misleading information. Some of the more common types of fraud include:
Fraud is a very costly problem and affects all of us by increasing the rates we pay for insurance.
One way you can think of your insurance provider is as a group investment against financial risk. The more people that have a policy with your provider, the larger the pool of capital is to help members when they are in need. The capital used to restore members is resultant from everyone's premium payments. There is a direct correlation between averages in insurance rates, and the average amount/cost of claims per year.
This means that if few claims are filed, by following years-long averages and trends, less overall premium is necessary for hedging against risk and loss. However, if many expensive claims are filed regularly, a rate increase could impact every one insured with the provider in order to balance the restoration costs.
When fraudulent activity plagues an insurer, that cost can ultimately be absorbed by all of the insureds. This makes it very important for insurance companies to monitor, detect, and act upon fraud, but there may always be times that bad actors are committing fraud that can go undetected. In fact, it is estimated that the cost of fraud in the property and casualty industry is approximately $20 billion each year which costs each of us approximately $300 every year in increased premiums.
The penalties vary by state but a conviction of insurance fraud can lead to imprisonment for up to seven years and fines up to $15,000.
Yes! If you suspect that someone is committing fraud, we want to ensure we are acting upon it as quickly as possible. Please call our office at (888) 764-7232.
Looking for a policy? Enter your zip code to get started!