Insurance claim fraud occurs when a person intentionally deceives an insurance company to get money that he is not entitled to receive from an insurance claim. The Coalition Against Insurance Fraud estimates that insurance fraud costs Americans at least £52 billion per year. Insurance claim fraud results in higher insurance premiums and higher costs for health care and consumer goods. Insurance claim fraud can happen in a variety of settings with different types of insurance policies.
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Automobile Insurance Claim Fraud
Car owners may make an insurance claim in which the damage to the vehicle is exaggerated, nonexistent or occurred before the alleged collision. For example, a driver has an existing dent in his car's rear bumper. When he is involved in a collision several months later, he claims that the pre-existing dent is the result of the new collision so the other driver's insurance will cover the cost of repairs.
"Vehicle give-ups" occur when a car owner either destroys her car (by burning it, for example) or sells it to a gang that resells the car overseas. The owner files a false insurance claim that the car has been stolen.
In some instances a bodyworks garage will overbill insurance companies. The shop may bill for work that was not performed or for the cost of new replacement parts when the shop actually used old parts.
Health Insurance Claim Fraud
Some health care providers file inflated claims with insurance companies. They may charge for services that were not performed or charge exaggerated fees. Another example of fraudulent billing is when a provider classifies a procedure as a "medical necessity" when in fact the procedure was done for cosmetic reasons.
The abuse of prescription narcotics has led to the problem of fraudulent prescription drug claims. Some doctors, pharmacists and drug traffickers will forge prescriptions for addictive painkillers and bill insurers for the drugs. The drugs are then resold on the street.
Property Insurance Claim Fraud
Home insurance companies receive many claims related to accidental house fires. Sometimes when the company investigate these claims, it discovers that the homeowner set fire to her own house or paid someone else to do it in an effort to illegally collect an insurance payout.
Another fraudulent claim involving homeowners insurance involves suspicious theft. A homeowner may claim that such expensive personal possessions as jewellery or home electronics were stolen from his home and try to recover the value of the "stolen items" from his property insurance. An investigation may reveal that the possessions were not stolen.
A business may become the subject of false insurance claims by a customer trying to collect an insurance settlement from the business's liability insurer. Some "slip and fall" accidents are staged, with the alleged victim planting evidence, such as spilt water on the floor, to suggest that the business was liable for the fall.
Life Insurance Claim Fraud
Life insurance fraud has been the subject of many fictional books and movies, but is a real insurance claim issue. A person buys a life insurance policy and then fakes his death so his family can collect a large life-insurance settlement. The fake deaths often "occur" overseas, typically in third-world countries, where it is difficult for the life insurance company to investigate the alleged death.
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