5 tips to avoiding insurance fraud

Find out exactly what insurance fraud and what measures you can take to avoid it happening to you!

Insurance fraud is a serious and expensive problem. Many people don’t even realize  they’re doing it and that it's a serious offence. A common form of fraud is inflating the insurance claim by adding in a few extra dollars. After all, the claim is already real so what’s wrong with exaggerating a bit on the price of your stolen goods or damaged property? It’s still insurance fraud and there are consequences.

Insurance fraud is not a victimless crime. People may think they are only stealing money from a big company with a lot of money. In fact, they’re also stealing from the people who purchase their insurance from that company, too. Constantly paying out higher claims than anticipated means insurance companies have to raise rates for everyone.

There are many ways in which insurance fraud is committed. Some of the most common types include:

1. Signing blank accident benefit forms

One form of insurance fraud includes when medical clinics ask the person filing a claim to sign a blank accident benefit forms. They then bill insurers for various services that were never provided.

2. Unscrupulous auto repair shops

Dishonest auto repair shops commit insurance fraud when they intentionally cause additional damage to a vehicle that’s been involved in an accident in order to receive more money. They might also bill a number of different insurers for repairs they’ve already completed with another company.

3. Selling a stolen vehicle

Insurance fraud also includes instances when people privately sell a stolen vehicle and change the vehicle’s identification number in order to cover up its true identity.

4. Intentionally caused collisions

When drivers intentionally cause a collision with an unsuspecting driver in order to make the innocent driver look at fault to collect money from the insurance company, it is another form of insurance fraud.

5. Forged signatures of medical practitioners

Forged signatures of legitimate medical practitioners are used by medical clinics on accident benefit forms to bill insurers for services not provided.

Depending on what type of fraud committed, the fallout can vary between “soft fraud” and “hard fraud.”

Soft fraud

Soft fraud is when an individual exaggerates an existing claim or overstates the damages in a car accident. This type of fraud is considered a misdemeanour and could involve fines, jail time up to one year, community service, and probation.

Hard fraud

Hard fraud is when someone causes or fabricates a loss for the deliberate purposes of getting insurance payments. It is almost considered a felony and comes with strict penalties like possible incarceration for a number of years.

1. Don’t sign blank accident forms
2. Do a full background check before purchasing a privately sold vehicle. Also have a mechanic review its condition.
3. When involved in a collision, report the incident immediately to your insurance company who can then recommend a reliable auto body repair facility.
4. If you believe a collision was staged, report the incident to the police and your insurance company immediately.