Insurance crime is any deliberate deception committed against an insurance company or agent for the purpose of unwarranted financial gain. This type of crime can be committed by applicants for insurance, policyholders, third-party claimants, professionals who provide services to claimants (doctors, lawyers and auto mechanics) and insurance company employees, agents and brokers.

Common insurance crimes include arson, padding or inflating claims, intentionally misrepresenting the facts on an insurance application and submitting claims for injuries or damage that never occurred. Insurance fraud can be "hard" or "soft".

Hard Fraud
When someone deliberately fakes an accident, injury, theft, arson or other loss to collect money illegally from insurance companies, this is hard fraud. Crooks often act alone, but increasingly, organized crime rings stage large schemes that steal millions of dollars.

Soft Fraud
When normally honest people tell "little white lies" to their insurance company, this is soft fraud or opportunity fraud. Many people think it's just harmless, but soft fraud is a crime and raises everyone's insurance costs.

Insurance crimes cost Americans $80 billion a year. But what does that number really mean? Yes, fraud costs you hundreds of dollars in higher premiums (nearly $950 for each family), but $80 billion would also:

• Fund the entire U.S. space program for five years
• Pay for more than twice the gold stored at Fort Knox
• Make insurance fraud a Fortune 10 corporation - if fraud was a company
• Pay college tuition for 12 million undergraduates a year
• Fund AIDS treatment, prevention and research for the next eight years

Source: Coalition Against Insurance Fraud

See Also:
Fighting Insurance Crime
Recognizing Insurance Fraud