6 examples of insurance fraud
A part of the fraudsters consider insurance fraud as an innocent practice. There are many examples of insurance fraud and you had better try to avoid such situations. After all, the consequences of committing insurance fraud are not negligible. We distinguish different forms of insurance fraud, among others:
- Lying or concealing information when applying for insurance
- Intentionally damaging objects
- Claiming a higher damage than the actual damage
- Distorting facts or pretending damage has been done
To make it clear what insurance fraud can look like, here are six examples of insurance fraud.
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Example 1: Prior to claiming, increase cover
A common example of insurance fraud is the adjustment of insurance cover prior to claiming. Imagine the following situation: You have a big dent in your car, because you accidentally hit a pole. You have a third party insurance with a limited casco car insurance. This means that the damage to your car is not covered. You quickly decide to change the insurance to a full casco coverage. Then you submit the claim to the insurer. Recovering existing damage from a new coverage is not allowed.
Example 2: Concealing the truth or a white lie
It seems so innocent to cover up part of the story by not answering a question asked by the insurer correctly. What difference does saying "no" once instead of "yes" make? However, the insurer wants to get an honest and complete picture of the situation. They therefore ask acceptance questions to decide whether to accept or reject an application. Lying or withholding part of the information damages the trust of the insurer. Misleading the insurer is considered fraud.
Example 3: Staging a situation
There have been cases where someone has staged a collision or burglary in order to collect insurance money. The insurer then has to find out that this is a fraud. This can be easy to prove in some cases. A staged situation can result in a high fine. The penalty can be especially high if you have endangered others in the staged situation.
Example 4: Declaring broken objects as stolen
Accidentally smashing up your phone is very annoying. Considering reporting it as stolen to the insurance company therefore doesn't sound like such a bad idea. After all, a stolen phone falls under your home contents insurance, which means that you will be compensated for the damage. This is a common way to commit fraud. The same trick happens with a broken laptop or car. The danger here is that the insurer can start an investigation into the ''stolen object''. If this object is subsequently found in your home, you are screwed. You will now be regarded as a fraudster by the insurance company. This can cause annoying problems when taking out new insurance policies.
Example 5: Reporting more objects as stolen than the actual number
Imagine that a burglar has been in your house. He has taken some things: your television and your IPad. It can be tempting to pretend that a phone has been taken as well. Oh, and there was some jewellery too. This is also a form of fraud. The group of people who take advantage of such a situation are called opportunistic fraudsters.
Example 6: Claiming existing damage when reporting new damage
Imagine that you have dents in your car because of a collision. That's good'', you think: "There are still some old dents in the car, I'll report them to the insurance company right away. This is also insurance fraud. You are taking advantage of an awkward situation. The dents were already there before the collision, so they will not be reimbursed.
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