It is important to protect yourself from insurance fraud to avoid becoming a victim. The consequences can be devastating both emotionally and financially. Recognize the most common types of fraud and learn how to avoid them.
Insurance fraud is a serious and expensive problem. Many people do not even realize they are guilty of it. One of the most common forms of this type of fraud is to inflate the claim by adding a few dollars. After all, the demand is justified so why not slightly exaggerate the price of what was stolen or damaged? However, it is an insurance fraud, and consequences are associated with it.
Insurance fraud hurts others as well as yourself
Insurance fraud is not without victims. Many think that it is only a question of extorting a small amount of money from a company that has too much. But in fact, these people also steal people who have taken out a policy with this company. With compensation consistently higher than expected, insurance companies must raise their rates for everyone.
Common Types of Insurance Fraud
There are several ways to commit insurance fraud. Some of the most common are listed below:
1. Signature of blank compensation forms
A medical clinic asking a person making a claim to sign a blank accident form commits an insurance fraud. It can then bill insurers for services that have never been provided.
2. Unscrupulous car repair shops
Dishonest car repair shops commit insurance fraud by causing additional damage to a vehicle that has already been involved in an accident to make more money. They may also charge multiple insurers for repairs already done by another company.
3. Sale of a stolen vehicle
Insurance fraud also includes private sales of stolen vehicles and changing their registration to hide the true identity of the vehicles.
4. Intentionally induced collisions
When a driver intentionally collides with another unsuspecting driver by arranging for him to be responsible for recovering the insurance company’s money, it is obviously another form of fraud.
5. Falsified signatures of doctors
Medical clinics using the false signature of doctors on the claim forms to charge insurers for services that were not provided.
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Consequences of insurance fraud
Depending on the type of fraud committed, the consequences can range from “slight fraud” to “serious fraud”.
A slight fraud refers to cases in which a person overstates a claim or overestimates the damages suffered in a car accident. This type of fraud is considered a minor offense and could result in fines, imprisonment for up to one year, community service and probation.
Serious fraud means a loss caused or manufactured specifically to obtain a refund from the insurance company. It is almost a crime with stiff penalties, such as a jail sentence of several years.
How to avoid insurance fraud?
Here are some ways to avoid insurance fraud:
1. Do not sign blank accident forms;
2. Make all the necessary checks before buying a private vehicle. Also ask a mechanic to do the overhaul;
3. If you are involved in a collision, report the incident immediately to your insurance company who can recommend a reliable auto body shop.
4. If you think the collision was intentional, report the incident immediately to the police and your insurance company.