The Repercussions of Insurance Fraud

Insurance fraud means more than just making false claims against your insurance

Insurance fraud occurs when someone intentionally and knowingly lies to gain a benefit to which they would not otherwise be entitled. Worker’s compensation, fire, automobile, healthcare and property insurers all fall victim to fraudsters. While some people might consider such frauds “victimless crimes”, there are inevitably dire consequences to the various types of insurance fraud.  Lying or providing false information are also types of fraud. So when you sign up for automobile insurance and you tell the agent that you won’t be using the car for work when you fully plan on doing so, you are committing fraud.

Consequences of Committing Fraud Will Come Back to Hurt You

The consequence of providing false information won’t be felt immediately. In fact, you can get away with fibbing about the usage of your car until you actually get in an accident. If it is discovered that you were using your vehicle contrary to what it is insured for, your coverage will be cancelled and you won’t receive any compensation for the accident. YES – that means you will pay out of pocket for your hospital stay, vehicle repairs and any damages to third parties. You also risk increased premiums and even being denied coverage for providing false information.

Worker’s compensation fraud is a common type of fraud. This occurs when someone claims they have an injury that they don’t have or pretend that the injury is worse than it is. For the worker, this type of fraud may seem innocent enough – they get an extra week of vacation and nobody else gets hurt. For the Private Investigator, this is a lucrative business, as we are hired every day to watch people who are claiming worker’s compensation when they aren’t entitled.

The consequences are not insignificant. Some frauds will leave you unemployed, with a hefty fine, a criminal record and even jail time. And you do eventually get caught. In February 2012, the Feds caught up with a 36-person $279 million insurance fraud ring. Among the involved were esteemed doctors and lawyers. If found guilty of all charges, they are looking at maximum sentences of up to 70 years[1] in prison! Short-term greed often overshadows sound judgment.

Auto Insurance Fraud

Auto insurance fraud is hitting New Yorkers where it hurts – their pocketbooks.  In 2010, insurance fraud cost New York $241 million. In fact, NYC drivers in Staten Island pay about 67% more and Bronx drivers pay a whopping 272% more than the state’s average for no-fault insurance[2].

Abuse of insurance is not exclusive to automobile insurance. The National Insurance Crime Bureau has reported a 10% increase in suspicious claims from 2008 to 2010[3]. This means all premiums take a hike – making insurance out of reach for many New Yorkers. Your fraudulent activities might make it impossible for your innocent neighbor, friend or child to afford health or automobile insurance.

I’m a Victim of Insurance Fraud?

You can be a participant of insurance fraud and not even know it. Medical insurance often takes a hit from medical providers when they are billed for treatments that were never provided, when patients are given treatments that aren’t necessary and are double-billed for legitimate treatments.

To avoid falling victim to the many repercussion of insurance fraud, there are several precautions that you can take. Never sign a blank insurance form on the promise that it will be filled out accurately. Review your insurance statements thoroughly and cross-check them with your records. Avoid paying for premiums in cash and check with the state insurance department to ensure that the insurer is licensed in your state. Most importantly, protect your mail and identification so you aren’t unknowingly drawn into a scheme by way of identity theft. NAI private investigators have experience in conducting insurance fraud investigation. If you are a victim of insurance fraud it may beneficial to hire a private investigator to gather the evidence that may help you.



[1] http://usnews.msnbc.msn.com/_news/2012/02/29/10541194-feds-allege-279-million-auto-insurance-fraud-scheme-in-new-york