What Is Insurance Fraud?

Insurance fraud is defined as an unlawful activity on the part of either the seller or buyer of an insurance policy. Insurance from the seller entails churning policies to generate more commissions, failing to submit premiums, and selling insurance policies from non-existent companies. On the other hand, buyer fraud can encompass fabricated medical history, amplified claims, viatical fraud, post-dated policies, faked kidnapping or murder, and death.

What Are the Types of Insurance Fraud?

Here are some of the most common forms insurance fraud takes:

1.Application Fraud

Application fraud is when a scammer intentionally and knowingly provides false
information on an insurance application.

2.Denial Fraud

This fraud is performed by the insurance organization, where they deny valid insurance claims, fail toinvestigate claims efficiently, purposely underpay claims, and deny coverage for specific conditions that should be covered.

3. Claims Fraud

In this fraud, a policyholder files an insurance claim under false pretences. An example of this type of fraud includes filing a claim for an accident or injury that never occured.

4. Death Fraud

Death fraud is where a policyholder fakes their death to receive the life insurance payout.

5. Inflation Fraud

Inflation fraud is the simple act of increasing the bill when filing an insurance claim.

How to Avoid Insurance Fraud?

Here are some tips to avoid insurance fraud:

• Ensure that the insurance company and agent have state insurance licenses.
• Compare various options before moving ahead with a policy.
• Speak to a financial advisor to determine if the insurance contract is legitimate.