The FBI reports that personal insurance fraud costs the insurance industry billions of dollars annually.
There are two common types of personal insurance fraud. What are they, and how do insurance companies expose fraudulent activity?
Soft insurance fraud
If a policyholder inflates a claim, he or she is likely guilty of soft insurance fraud. For example, someone who sustains whiplash due to a rear-end collision may claim a severe injury. The victim hopes to receive a larger settlement by overstating the claim.
Hard insurance fraud
Hard insurance fraud involves inventing an incident in order to file a claim for insurance compensation. For instance, the perpetrator might stage a slip-and-fall accident on the floor of a supermarket and submit a claim citing extensive injuries. Not only is hard insurance fraud illegal, but the incident itself might also prove to be a criminal act.
A proactive stance
With so much to lose, insurance companies have become increasingly proficient in the effort to find and expose fraudulent activity. Social media is an unexpected ally in this regard. It appears that people cannot resist going online to boast about their success in purposely misstating an insurance claim.
Building a case
Depending on the circumstances, insurance fraud in the state of New York can either be a misdemeanor or a felony. Significant penalties accompany both charges. Even if officials catch a perpetrator, the insurance company affected will still suffer financial damages. However, a successful defense will help to mitigate those damages and right the wrong caused by a fraudulent personal injury claim.