There are various types of insurance fraud that’s why people must know how to spot them and prevent the fraud from happening. By contacting your local state department for insurance, you can secure yourself from paying high premiums. Below are 5 types of insurance fraud that you must be familiar with:
1. Figure out what creates insurance fraud. A person who is involved in insurance process is a candidate of creating insurance fraud, whether it’s the insurance company, an insurance claims adjuster, an agent or a consumer. For better understanding, insurance fraud happens when one person or entity purposely cheats another person for an unlawful intention. This occurs everywhere in the pipeline of insurance process—from purchasing and utilizing insurance to the deeds of underwriting and selling the insurance policies.
2. Understand the various kinds of premium diversion. Once insurance premiums get misused, it becomes one main reason for insurance fraud. Basically, premium diversion occurs if a trusted insurance agent receives the premiums for his personal gain—without the need of passing them to the underwriter. It only means that the insured person knows he’s paying his premium without knowing that the amount paid is diverted.
3. Learn about the impact of insurance fraud. Each year, the estimated total value of insurance fraud goes beyond $40 billion. Most of such costs have been passed along to clients since insurance firms need to increase premiums to every policy to cover the incurred losses caused by fraudulent doings. Because of this, an estimated cost for the additional premium each year reaches to $400.00 to $700.00.
- Be cautious of insurance policies with much lower rates compared to competitors. This is a strategy being used to attract more clients.
- Another instance where premium diversion happens is when an unlicensed person sells a counterfeit policy and collects premiums with no purpose of paying claims.
4. Identify the practices of consumer insurance fraud. This type of fraud happens in various activities because there are insurance varieties accessible to customers. Many instances can picture the intended staging of damages, injuries, accidents, robbery, arson and other related losses which are covered by an insurance policy. Since these things set up insurance fraud, other minor instances include:
- Purposely giving dishonest information or counting out right details on the application form like lying on the terminal diseases.
- Whether the insurance is life, medical, car, homeowner or disability, there are examples of insurance fraud for these types.
- Overstating a claim for personal gain like in the degree of injury when having a disability claim.
5. Classify the forms of claims adjuster fraud. Insurance claims are reviewed by claim adjusters on behalf of a person or an insurance company in defining the actual liability of the insurer for a given claim. Fees can be collected by fraudulent adjusters in reviewing the claim with no intent of following up. Such example can constitute insurance fraud. Other instances come when claims are inflated or falsified which go against the insurance policy.
Although consumer fraud usually defrauds the real insurance firm, the adjuster fraud can cost insurance companies, customers, or both of them.
To get more information about the common forms of insurance fraud in Florida, please contact us at DMG Insurance and Financial Services, Inc. (http://www.dmginsurance.com) at 543 N State Road 7, STE 106, Royal Palm Beach EL, 33411, phone 561 422 7071, Fax 561 422 7072.