Things You Need To Know Before You File For Insurance Fraud

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The idea behind having and providing insurance seems perfectly noble. In reality, however, some policyholders and insurers are consumed by greed. As a result, they engage in fraudulent activities to make financial gains against each other. The investigation and litigation for these are bound to be complicated. So if you or a loved one is involved, consult a criminal lawyer like Robert A. Dodell that has experience in insurance fraud to obtain most appropriate legal assistance.

 

What Is Insurance Fraud?

As the term suggests, insurance fraud means providing false information in any process involving insurance with the intent to gain. Policyholders and insurers are the main possible perpetrators. However, impostors and third parties may also engage in such crime. A third party is either a professional or a company that willingly renders its services to support a policyholder’s fallacious claim. Healthcare professionals are one of the potential third parties engaged in insurance fraud.

What Are The Elements Of Insurance Fraud?

Insurance fraud comes in various forms. Each form has a different set of elements as well. Furthermore, the elements for each form differ from one state to another. Nevertheless, insurance fraud, in general, has three elements that must be proven in a court. These elements are as follows:

  • The defendant deliberately provides false information.
  • The defendant has intent to gain.
  • The fraud is done in any process involving insurance.

Losing money directly due to the fraud may serve as evidence that the defendant has the intent to gain. However, there’s no need to prove the financial loss as it’s not an element of the crime.

 

What Are The Penalties For Insurance Fraud?

The penalties are different for every form of insurance fraud and in every state. Some states regard minor frauds as misdemeanors. As misdemeanors, the penalties are less severe. Possible penalties include probation, community service, and paying a fine. The convicted may also serve some jail time.

Severe cases, on the other hand, result to heavier penalties. Fines are higher. Jail time is longer, and it’s not just a possibility. The public records, credit rating, and reputation of the convicted individuals are also tarnished. With these, applying for loans, jobs, and leases will become more difficult for them.

Such penalties are only deemed appropriate considering that billions of dollars are lost to insurance scams every year. Additionally, these fraudulent activities increase the amount of premiums that policyholders must pay. But the worst part is that some frauds involve endangering the lives of others.

 

Types of Insurance Scams & Fraud

Insurance fraud is mainly classified into soft fraud and hard fraud. Your insurance fraud lawyer may specialize in one or two of the said types. The basic difference between the two is that the potential loss is much greater in hard fraud compared to soft fraud.

In hard fraud, there is a deliberate act to create damage, injury, or loss that is covered in an insurance policy. After the act, the perpetrator claims as much as thousands to millions of dollars.

Compared to hard fraud, soft fraud is way more common. It tends to involve legitimate claims as well. However, the perpetrator usually exaggerates some details in the claims to get more. In some instances, the perpetrator omits some vital information to lower down the premiums.

Soft fraud and hard fraud may involve different types of insurance. Below are the more specific types of insurance scams.

 

Insurance Agents & Agency Fraud

In this type of fraud, the victim is usually the policyholder. The perpetrator, either the insurance agents or the entire agency, denies due benefits by doing any of the following:

  • Issuance of bouncing checks
  • Providing less than the due amount
  • Lying about records

 

Health Insurance Fraud

Policyholders and healthcare professionals are the typical perpetrators of this scheme. These may or may not involve legitimate claims. Below are some types of fraud that involves health insurance.

  • Inflated billing
  • Concealment of health conditions
  • Prescription drug fraud
  • Alteration of forms

 

Car & Auto Insurance Fraud

Car insurance fraud is one of the usual crimes done by organized rings. Nevertheless, policyholders and insurers alike may also engage in this crime by doing any of the following acts:

  • Faking damages
  • Exaggerating damages and injuries
  • Vehicle arson
  • Vehicle theft
  • Paper collision

 

Life Insurance Fraud

Scammers wanting to gain more than a hundred bucks go for life insurance fraud. This type of fraud is done by:

  • Faking death
  • False policy application

 

Bait-And-Switch Schemes

Bait-and-switch schemes mainly involve the insurer. These actually fall under false advertising. In these schemes, the insurer lies to the prospective policyholders to entice them. Acts involved in these schemes include:

  • Advertising a premium rate lower than the actual one
  • Increasing premiums for no legitimate reason

 

Force-Placed Insurance

In this case, banks and lenders are the potential perpetrators. This type of fraud happens when the borrower fails to extend an insurance policy for his property. Then, the lender forces to get the property insured. This means the borrower can’t shop around for a better deal. This insurance fraud involves:

  • Not informing the borrower (policyholder) about the insurance costs
  • Denying the borrower the chance to apply for a better policy

Gathering and refuting evidence for insurance fraud will be a meticulous process. Scammers are experts on these things so you shouldn’t just act hastily. To improve your chances, consult a reliable insurance fraud lawyer like Robert A. Dodell, Attorney At Law.