Shield Yourself From Insurance Fraud

Insurance fraud is the act of creating a false representation of insurance policies, documentations and benefits for the offender to gain financially. Fraud schemes usually make up the faulty or nonexistent representation in order for policyholders or victims to rely and trust the offender into investing real assets. The offender obtains benefit or advantage which he is not legally entitled to. The offense is then classified as a misdemeanor or felony depending on severity.

Insurance fraud is the act of creating a false representation of insurance policies, documentations and benefits for the offender to gain financially. Fraud schemes usually make up the faulty or nonexistent representation in order for policyholders or victims to rely and trust the offender into investing real assets. The offender obtains benefit or advantage which he is not legally entitled to. The offense is then classified as a misdemeanor or felony depending on severity.

The following elements are present in all fraud cases. First element is the offender who intentionally and willfully creates a false material statement of fact or covers up a material or existing fact. The second element is the victim or policyholder who relies or had reasonable grounds to believe the false statement of fact leading to his detriment. The third element is the act of deception in order for the victim to offer reliance and valuable asset in a nonexistent transaction or the offender providing a promise to perform when he truly does not intend to.

Who Are The Victims?

All types of programs and institutions can be targets for insurance fraud such as workers’ compensation, life insurance, disability insurance, health care benefits, automobile and house insurance and death insurance. The false representation can be created in any aspect and step of the insurance process like application, rating, claiming, billing and payment. Any individual can be the offender in an insurance fraud scheme from the lowest to the highest positions and employment as well as clients and those outside the agency but had knowledge about a scheme.

The law strictly prohibits any individual from intentionally and willfully presenting false, incomplete or misleading information that claims to support an insurance application, policy or other benefit. Any violator will be guilty of a class D felony. Other associated criminal acts are theft, larceny, identity theft and conspiracy. Federal laws are very strict about the crime since it can have devastating effects on the overall financial capacity and outcome of the economy. Over $50 billion is estimated to be the total cost of fraud in insurance consumers in the U.S. each year.

Automobile insurance fraud is also a usual practice among violators. The term refers to the act of any individual who intentionally and willfully presents a written statement, causes a written statement to be presented or prepares a written statement with knowledge or reasonable belief that it will be presented to or by an insurer, self-insurer or agent thereof. The offender has full knowledge that the material contains false information, conceals statement of fact in order to deceive another individual into entering a contract or claims benefits which he is not entitled to.

Penalties For Insurance Fraud

Violators will be punished by fines and imprisonment. Fines can range anywhere from $10,000 to $5,000,000 depending on the profit made by the offender and damaging effects brought to the insurance agency and policyholder. Offenders can be imprisoned from one to twenty years depending on severity of the offense and accumulation of other criminal acts. Other associated criminal acts will be sentenced separately.

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