Insurance fraud is any act committed with the intention of obtaining a fraudulent outcome from an insurance process. The claimant may attempt to get a benefit that they are not entitled to. Insurance fraud is one of the most common crimes committed around the world. Types of insurance fraud are diverse, and they happen in all areas of insurance. Below are some of the types of insurance fraud;
In this case of fraud, the driver and the accident victim are the ones that are involved in the scam. In some cases, they involve bystanders and insurance investigators so that they can be assured of getting the benefit. When the fake accident occurs, they inflate the value of the vehicle to almost double its price.
There are two ways in which criminals can perpetrate this crime. The owner of the car could sell the body parts of their cars to a body shop, and then they could use the parts as evidence that the car has been stolen. The second way which is the most prevalent is individuals sell their cars to overseas buyers without the transaction involving any paperwork. After that, they make a claim to their insurance companies that their car has been stolen hence expecting compensation.
Staged Home Fires
Homeowners insurance fraud costs insurances companies as well as their clients a lot of money every year. The most common type of this fraud is staged fire or acts of vandalism. The owner of the property will keep the items in the property safe before the scam, or they will make sure the insurance company is aware of the items in the property then destroys them. Criminals could be hired to set the place on fire or to vandalize it and victimize the owner.
This form of fraud is so common that insurance companies may give the real victims a hard time before compensating them. The fraud will take out a life insurance policy on them and make their spouse a beneficiary. After the policy has been in effect for a while, the criminal will fake their death, and their spouse will be compensated.
Individuals who rent homes will take out renter’s insurance policies to cover the costs of what they possess. When financials times get harsh, they may sell their possessions and report them as stolen. They can also do that before moving out and then send their claim to their respective insurance companies.