Clever or unscrupulous, no matter how you characterize it, no one likes to fall victim to fraud and scams. Unfortunately, we're all likely to be victimized even if we never actually come across someone who's cutting corners to make a buck.
Generally, fraud occurs when someone intentionally lies about something to get something he doesn't deserve or hasn't earned. Money or services are usually what he's after. Fraud is a crime in every state. It's usually treated as theft because the person gets or takes something he's not entitled to legally.
Insurance fraud happens when someone gets the benefits of an insurance policy he's not entitled to. Or, insurance agents - either real agents or scammers - take your insurance premiums and don't provide you with the coverage you're after, and sometimes no coverage at all.
According to the Coalition Against Insurance Fraud (CAIF), the economy has had a big impact on insurance fraud. In 2009, state fraud bureaus - agencies in charge of investigating and preventing fraud - reported a 15 percent increase in all of the major categories of fraud tracked by CAIF.
Insurance fraud takes many forms. For instance:
Slip-and-Fall "Accidents." There's been a big increase in personal injury claims by customers and patrons against property owners and insurance companies. The claims have doubled across the US, but they've skyrocketed in Las Vegas.
Accidents. Fake or staged car accidents are widespread. One common ploy involves scammers intentionally causing an accident to collect insurance money for property damage and medical expenses. Sometimes the scammers work with clinics and share the money they bilk out of insurance companies for unneeded medical treatment.
Property Damage. People with insurance are setting their cars on fire and falsely reporting them as stolen to collect on insurance. They're also padding or inflating insurance claims when personal property is lost or damaged, either on purpose or in a real incident, like a fire or burglary.
Agents, too? With the new health care law, there's no shortage on health insurance scams. Some popular ones involve insurance "firms" and "agents" offering plans that provide no coverage at all; claiming "full coverage" but giving only very limited coverage; charging high premiums for very small discounts on prescription medicines.
The net effect of these and dozens of other insurance fraud schemes and scams hits us all, whether or not we actually come face-to-face with a scammer. When insurance companies pay out on false or fraudulent claims, they pass on that expense to you and me. We pay higher premiums for car, homeowners', and other insurance.
We may pay more for goods and services, too. The store or mall hit with a bogus slip-and-fall accident may increase prices to recoup the money it pays to the "victim" or has to pay in increased insurance premiums.
What You can Do
If you suspect insurance fraud, report it as soon as possible to:
- Your state's fraud bureau
- Your state attorney general
- The National Insurance Crime Bureau, or
- The insurance company involved
Insurance fraud takes a toll on us all. By reporting suspected fraud, not only do you help protect yourself and your family, but many others you don't even know.
Questions for Your Attorney
- Is there a reward for uncovering insurance fraud?
- Are there things I can do to protect myself from a fender-bender scam?
- How can I ensure that my insurance agent is on the level? Is there a registry of agents, and can I see if there have been any complaints against my agent?