Insurance fraud can be described as deliberate deception for financial gain, and it can affect policyholders or insurance companies.
Policyholders engaging in fraud might commit actions such as creating fake injuries to submit a claim and be paid, while insurance agents might steal premiums from policyholders.
There are various ways in which insurance fraud can affect you, but there are effective ways in which to deal with it and recover your financial losses.
Read the rest of this article to learn about the common types of insurance fraud, how to spot it and deal with it, and how to prevent it in future.
What are Common Types of Insurance Fraud?
Some of the most commonly-reported types of insurance fraud include the following:
- Ghost broking. This is the selling of fake insurance policies.
- Claims fraud. This includes reporting false information or intentionally not disclosing information to insurance companies to receive payment for claims.
- Estimates inflation. Contractors will inflate estimated costs for repairs. This is an example of third-party insurance fraud.
- Insurance bad faith. This can include intentionally denying or delaying claims to avoid paying clients.
How Can You Prevent Insurance Fraud?
Both policyholders and insurance companies can prevent fraud. Tips for insurance policyholders include the following:
Document everything
This will help you strengthen your claims submitted to the insurance company and deter them from intentionally trying to avoid paying them.
Get your Policy Reviewed
You should review your insurance policy to identify any unfair, unjust, or vague sections that can be misinterpreted. Have the document legally reviewed by a lawyer who will use their legal knowledge to identify red flags, preventing issues in the future.
Although it might feel overwhelming to hire a lawyer for policy review, ContractsCounsel makes this an easy process. ContractsCounsel is an online legal network that connects clients with vetted lawyers on the platform for document review and drafting.
To get your policy reviewed by a professional lawyer, you can post a request for free on the platform. Multiple lawyers will send you bids. You can review their information to choose the best-suited lawyer for your needs.
Verify the Agent Identity
If someone calls you, claiming to be from your insurance company, you should verify their identity. Request their number and direct contact number at the company. Call the insurance provider directly if you’re unsure of the person who’s calling. They might be trying to steal your information.
Check that your Policy is Active
A type of insurance fraud involves agents stealing client premiums, resulting in lapsed policies. This can put you at risk of not knowing you’re not covered by your policy until you need to make a claim. To prevent this situation, regularly ensure that your policy is active and keep proof of your monthly payments.
Tips for Insurance Providers
- Research claims thoroughly. This should involve conducting investigations, scrutinizing submitted documents, and interviewing claimants.
- Streamline the claims process. By reducing human involvement in claim processes, insurance companies can minimize risks of human error.
- Provide employee training. Regular training for insurance company employees can alert people to scams and risks, while encouraging the reporting of suspicious behavior.
How Can You Deal with Insurance Fraud?
If you’re the victim of insurance fraud as a policyholder, there are important steps to take promptly so that you can report the incident and recover your losses.
Gather Documents
You should collect all important documents that show evidence of the fraudulent behavior. This can include inflated contractor estimates or misleading insurance policies, as well as communication between you and the insurance company or agent.
Report the Fraud
You should report the instance of fraud to the insurance company and your state department of insurance.
When reporting insurance fraud, you should mention the following details:
- Provide as many details as possible of the fraud, such as how and when it happened.
- Provide personal details of the fraudster, if possible. This could include phone numbers, email addresses, or names.
Review Claims
You should always check and double-check your insurance claims to ensure that no one has changed important details. Look for inconsistencies, such as a lack of evidence or amended claim amounts. Check all your personal and banking information, as fraudsters could change these details to divert payments into their accounts.
Secure Your Accounts
If you suspect you’ve been a target of insurance fraud, you should act quickly to minimize your financial losses. This is especially important if you shared private information with a suspected scammer. Let your financial institutions know about the fraud and change all your account passwords.
Consult an Insurance Fraud Lawyer
Whether you’re a victim of fraud or being accused of it, hiring a lawyer will ensure you receive the legal support you need. Here is how they can help you.
For policyholders:
- A lawyer will review your insurance policy. This will alert you to ghost broking, a scam involving the selling of fake insurance policies. They will also be able to clarify complex insurance jargon to strengthen your case.
- They will help you negotiate with contractors or agents involved in the insurance fraud to recover your losses.
- They will fight against any wrongful claim denials, showing evidence of your claim.
- If you’re dealing with a bad faith insurance company, your lawyer will file lawsuits against them.
- They will negotiate settlements from your insurance company.
- They’ll assist you with reporting the fraud.
For insurers accused of fraud:
- A lawyer will analyze and investigate your case to strengthen it.
- They’ll gather evidence to show that your claims are legally sound.
- They’ll represent you if you’re taken to court or investigated for fraud.
- They’ll deal with law enforcement and investigators involved in your case.
- They’ll handle communication with the other party so that you don’t land in legal trouble or accidentally create complications.
Do you need a lawyer for insurance fraud?
Contact a lawyer on ContractsCounsel. You’ll work with a lawyer experienced in insurance fraud to find the best option to resolve the case and recover your money. Lawyers on the platform are skilled to provide thorough and legally-sound services for all types of insurance fraud.
