The Coalition Against Insurance Fraud estimates that nearly $80 billion is taken by insurance fraud each year. With the exception of Oregon and Virginia, 48 states and the District of Columbia have insurance-fraud laws that make this crime a specific, punishable offense. This issue is a growing concern that has been gaining more public and legal attention over the years.
For instance, in 2002, 33 percent of people believed it was acceptable to commit petty insurance fraud - like padding an insurance claim - to meet a set deductible. In 2014, this general belief dropped by more than 11 percent. Similarly, approximately 68 percent of individuals believe that insurance fraud is committed largely because people think they can get away with committing the crime; this number is up nearly 20 percent from 2003.
If you are caught committing insurance fraud, the penalties and charges you could face are serious. Along with raising the premiums for all insurance clients, committing fraud could also result in:
Time in prison: If you are convicted of serious insurance fraud, you could face a substantial amount of time. Though the time requirements vary by state, the maximum time you could spend in prison in seven years.
Substantial fines: Similar to the amount of time you could spend in prison, the amount of substantial fines varies by state. However, you could be looking at fines of hundreds of thousands of dollars.
Unfortunately, even with heightened public concern and increased legal awareness, most individuals and businesses are at risk of committing insurance fraud at some point. Thankfully there are several steps you can take to make sure you never commit insurance fraud. The following three are most important:
Know What Insurance Fraud Is
Perhaps the most reliable way to avoid committing insurance fraud is to know what insurance is so that you’re able to recognize the dangers and fully avoid the crime. Simply put, insurance fraud is committed when an individual purposefully deceives an insurance agency or agent with the intention of obtaining money to which they are not entitled. Deceiving the agency or an agent can be done by submitting untrue or misleading information on an insurance claim or application, or by omitting vital information.
2. Know The Difference Between Hard and Soft Fraud
Insurance fraud comes in two different forms: hard and soft. Hard fraud occurs after an individual purposefully fakes an accident, injury, theft, arson or other incident with the sole purpose of illegally obtaining money from an insurance company. Soft fraud, on the other hand, is a small “white lie” that an individual tells an insurance company. Though many people view soft fraud as a harmless act, it is still a crime that can be punishable by law.
3. Be Honest With Your Agent
To avoid committing soft or accidental fraud, make sure you are completely honest with your insurance agent. Being honest will help your agent find you the most appropriate coverage for your needs. Furthermore, many cases of accidental fraud occur when individuals attempt to find coverage on their own, thus the importance of hiring a trustworthy, professional insurance agent.
At Best Insurance Services in Moreno Valley, our agents work with you to match you with an insurance policy that meets all your wants and needs. Best Insurance Services, a Riverside insurance agency, represents over 30 insurance carriers and is dedicated to providing you with the most affordable, dependable coverage possible. Call us today for more information.