Insurance Fraud Doesn’t Pay

8:57 am

The term ‘insurance fraud’ refers to any actions taken in attempt to fraudulently obtain a payment or other benefit from an insurance policy. Consider the many types of insurance: homeowner, renter, automobile, health, life, or workers’ compensation. With each of these comes the potential for insurance fraud at the hands of unscrupulous individuals. According to the Coalition Against Insurance Fraud, fraudulent insurance claims in the United States are nearly $80 billion each year.

Many people assume that when they commit insurance fraud they are committing a victimless crime stealing only from the insurance companies. They justify their actions by claiming that the insurance companies can afford it and they aren’t hurting anybody. This is far from the truth. Because of such high losses suffered each year by insurance companies, they must raise their premiums and these costs are absorbed by the consumer.

Insurance fraud affects everyone. It raises insurance companies’ operating costs so they are unable to create new positions which in turn limits job growth in this large industry. It also makes it more difficult for the majority of the honest, hard-working people to collect much needed compensation when they are injured in an accident or suffer property damages by unforeseen causes. Because of the high cost of fraudulent insurance claims insurance companies often employ rigorous, costly, investigations as standard operating procedure when a claim is made. Not only does this extend the processing time for those depending on their insurance claims to fix their vehicles, homes, or pay hospital bills, it also further increases the costs of insurance which is again placed on the consumer.

 

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