Fraud
What Does Fraud Mean?
Fraud is the illegal act of deceiving, lying, or Misrepresentation another party within the insurance industry. Both buyers and sellers can commit fraud. Buyers may commit insurance fraud by filing false claims, falsifying medical records, or misrepresenting other important details. Insurance sellers can commit fraud by selling illegitimate policies, failing to submit premiums, or engaging in other deceptive practice. Individuals found guilty of insurance fraud can face jail time and other legal consequences.
Insuranceopedia Explains Fraud
Insurance is intended to function by having buyers provide accurate information about themselves, purchase policies from legitimate companies, and file claims only when they have valid reasons to do so. However, this does not always occur. For instance, a car insurance policyholder may want a new vehicle and might “accidentally” crash their car into a tree to create a reason to file a claim, hoping the insurance company will pay for a new car up to the policy limits. This is just one example, as insurance fraud can be committed in many different ways.
