What is Insurance Fraud?
Insurance fraud is a serious issue in the United States and it can have a significant impact on people’s lives. It happens when someone knowingly deceives an insurance company or agent for profit or personal gain. Insurance fraud can occur in many different ways, such as: falsifying information on an insurance application to get coverage, filing false claims for damages, or staging accidents to collect money from the insurance company.
Florida Insurance Fraud: How to Avoid It and What to Do if You Suspect It
Insurance fraud has increased over the years due to many factors including the increased sophistication of criminal networks, the increased use of social media, the increasing number and sophistication of cyber-attacks, and reduced penalties for committing insurance fraud.
This type of insurance crime is committed to making a profit. Fraud can be committed by individual consumers, companies, agents, and adjusters. Some of the most common types of insurance fraud are:
Auto Insurance Fraud
Car insurance fraud in the U.S. costs auto insurers and consumers over $40 billion dollars each year. The most common types are:
- False insurance Claims
- Staged Auto Accidents
- Claiming Damage from Previous Accidents Into a Current Claim
- Misrepresenting Information to Get Cheaper Car Insurance Rates
- Multiple Claims Filed for a Single Accident
- Paying Online for Fake Insurance Policy
Homeowners insurance fraud
A homeowner may falsely report a loss or claim on an inflated value of their home or property to get more money from their insurer.
Insurance fraud in Florida
An individual may falsely claim they are a victim of an accident or natural disaster, such as a Hurricane, to get money from their insurer.
Insurance fraud investigation
When insurers suspect there have been fraudulent activities, they will investigate the claim or claims and determine if valid or not. The carriers have the right to deny your car insurance claim. The investigation process can take anywhere from weeks to years before it is complete.
Insurance Fact
Florida Insurance Fraud Statistics and Facts
The Florida Insurance Fraud Task Force states that insurance fraud costs Floridians $1.6 billion annually. That is a lot of money that could be going to other things, like healthcare or education. So, how does this happen? There are many ways to commit insurance fraud, but the most common way is by staging an auto accident. There are three types of staged accidents:
False reporting
This is when someone reports an accident that never happened to collect money from the insurance company.
Claims for injuries not related to the accident
This is when someone claims they have injuries as a result of an accident even though they were not involved in it.
Falsifying medical records
This is when someone alters medical records to collect more money in the event of an injury.
Malicious prosecution
This is when law enforcement files a false report.
There are many different types of auto insurance scams and fraud, so please read this article from FBI for more information.
| Minimum Insurance Required |
Bodily Injury (BI) | Property Damage (PD) |
Personal Injury Protection (PIP) |
|---|---|---|---|
| Florida (No-Fault) | optional coverage | $10,000 | $10,000 |
| Texas (At-Fault) | $30,000 per person, $60,000 per accident |
$25,000 | optional coverage |
| Tennessee (At-Fault) | $25,000 per person, $50,000 per accident |
$15,000 | optional coverage |
Insurance fraud in the US is a huge issue that costs the industry an estimated $1 trillion each year. With more than 7,000 companies in the insurance sector, it has become a much bigger problem as the sheer size of it provides greater incentives and opportunities for illegal activities.
The penalties for insurance fraud vary by state. Insurance fraud in Florida may result in a fine, probation, and prison sentence.
