Insurance fraud is one of the most pervasive problems in the financial industry today. It also happens to be one of the largest crimes in the United States. This type of fraud costs insurance companies and policyholders at least $80 billion dollars each year. Alarmingly, the rate is growing steadily. A common form of insurance claim fraud involves auto insurance policies.
Definition
The term, “auto insurance fraud” refers to any fraudulent activity committed to acquire financial gain from an insurance company. Examples of such acts include fake or exaggerated car accident injuries, staged car theft, planned collision and false insurance claims. This kind of fraud may be committed by insurance applicants, insurance service providers, policyholders and third parties who wish to gain money from the insured’s third party auto liability insurance.
Different Types
Auto insurance fraud comes in different types but it is generally classified into two categories, namely, hard fraud and soft fraud. Hard fraud is a serious offense that involves faking or staging an accident, injury, loss, arson, or any other situation, which would enable the person to make an insurance claim from the insurance company. Soft fraud is minor compared to hard fraud but still a crime nonetheless. This involves falsification of information on the insurance application form or the insurance claim request. One common soft fraud scheme is pretending to be in much more pain that what actually is true in order to receive a greater amount of insurance settlement. This type is more prevalent than hard fraud, as it is easier to perform and more difficult to detect.
Consequences
Consequences for car insurance fraud differ according to the gravity of the offense. Repercussions for soft fraud acts like exaggeration of medical claims or vehicle damage include fines and higher premiums for future insurance policies. It may also mean cancellation of your insurance coverage. Worse, legal penalties for insurance claim fraud may occur when a company files a lawsuit against you and if you are found guilty in the civil court, you will be liable for the amount of damages you have caused the insurance company along with other legal fees and penalty charges to imposed by the court. Hard fraud, on the other hand, has more serious consequences such as criminal conviction. This includes hefty fines and jail time. Aside from that, you will also face increase in car premiums and possible denial of future car insurance applications.
Getting Legal Help
Auto insurance fraud is a very serious offense. If you were a victim of auto insurance fraud or were wrongly accused of committing such crime, it is recommended to get legal help and hire a lawyer who specializes in car insurance.
