• Tuesday, May 28, 2024
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BusinessDay

Understanding insurance fraud

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Insurance fraud is one bad challenge insurance companies face in trying to keep its own side of the contract. This is a get-rich-quick scheme that some individuals employ to take advantage of insurance companies and get them to pay out money in the form of claims for which they are not eligible to receive. Not only is it punishable by law (once discovered), it also costs taxpayers lots of money every year in the form of increased costs of service to mitigate the cost of these fraudulent payouts. The most common types of insurance fraud include:

Disability insurance fraud: Purporting to be ill so that your insurer may pay you money to cover your illness is a form of fraud. Many people take advantage of seemingly harmless accidents that occur in the workplace and pretending to be too ill to work so that the company may pay you money as you stay home and recover is fraudulent.

Some health facilities also commit this type of health insurance fraud by over-inflating the services they charge you for so that your insurance may pay them more than what is owed is also very common. Another common fraudulent activity that health providers engage in is claiming they performed costly procedures on you that they never did and getting the money from your insurance on the same.

Property insurance fraud: You have probably come across cases where a business person suffered a fire on their premises that wiped out their entire business. Upon further investigation, authorities find that the business owner arranged for the place to be burned so that they may file an insurance claim and take the payout.

Many people who are in over their heads in debt decided to put their business on fire as a way to make quick money. Insurance companies are well aware of this and have a team of investigators that check to make sure the premises were not set ablaze on purpose by accelerants. Only when the police investigation and the investigation by the claim adjusters are done and the fire is found to be accidental.

Sometimes, a business or home owner may falsify a break in and claim that their valuables were either damaged or stolen in the event.

Auto insurance fraud: This typically involves trying to get more out of an accident than should be covered. For instance, if you bumped your car against an electric pole months earlier and then are involved in an accident, you may try to pass off that initial damage from the electric pole as part of the damage caused by the automobile accident so that your insurance may pay for all of it.

 

with Agency report