Fraudulent Claim

What Does Fraudulent Claim Mean?

A fraudulent claim, in the context of insurance, is a claim that involves the misrepresentation of facts with the intent to wrongfully obtain insurance benefits.

This type of claim is also known as a false insurance claim.

Insuranceopedia Explains Fraudulent Claim

Fraudulent claims can be classified as either hard or soft fraud. Hard fraud involves a claimant deliberately planning, inventing, or creating a loss to receive insurance benefits, while soft fraud occurs when a claimant exaggerates a legitimate claim or provides false information to obtain greater compensation. Examples of hard fraud include staged auto accidents that lead to a fake claim on a totaled car. Soft fraud is common after major storms, when policyholders pad the damage on a hurricane insurance claim. Making fraudulent claims is a crime, regardless of the outcome. Some fraudulent claims also come from inside a business, which is why many owners take steps to prevent employee theft and fraud. Fraudulent claims constitute a significant portion of total claims filed, with losses for insurers estimated to be in the billions each year.