What Are the Most Common Types of Insurance Fraud?

Frequent Insurance Frauds in San Diego, CA

Insurance fraudĀ is the leading contributor of high insurance premiums in the U.S. today. The penalties for committing this crime can vary from hefty fines to prison terms, but this still does not deter some financially strapped consumers. Here are a few common types of insurance fraud you should be aware of.

Faked Death

A faked death involves a beneficiary attempting to claim payment due on a life insurance policy when the insured is still alive. In some rare cases, policies are even taken out on people who have no relationship to the beneficiary at all. Extreme measures to collect on a policy include the staging of a memorial service and forgery of death certificates.

Staged Accidents

Policyholders often create disasters like car accidents and building fires in an effort to collect payment. The policyholder is seeking to obtain a newer automobile or a better building structure through destroying the older one, which can be done by damaging car parts or igniting a fire to ruin the property beyond repair. In these cases, most policyholders overestimate the value of the property to gain a larger settlement.

Health Insurance Billing

Either the policyholder or the health care organization involved in the claim can commit this type of fraud. A policyholder might either withhold medical information from the provider or exaggerate medical symptoms or injuries in the event of an accident to receive unauthorized benefits. A health care organization might defraud a San Diego health insurance agency by billing for unnecessary procedures or by overbilling patients.

Natural Disasters

Homeowners whose properties were damaged due to a natural disaster (e.g. a flood or hurricane) might exaggerate the amount of the damage done to the home to secure a larger settlement. Also, some homeowners might try to file phony claims to a busy San Diego home insurance agency after a major disaster even if no damage was involved. In some cases, members of the same household have also tried to file multiple claims on the same dwelling.

Some policyholders might be concerned about how fraudulent insurance claims filed by others could affect their own premiums. To learn more about this or for free quotes on affordable homeowners, health, RV, and auto insurance in San Diego, call the insurance experts at Tri-Star Insurance at 619-272-2100. We hope to hear from you soon.