Preventing and Awareness of Insurance Fraud
Insurance fraud is a serious crime that affects everyone. According to the Coalition Against Insurance Fraud, fraud costs American families an estimated $308 billion annually. These costs are passed on to honest policyholders through higher premiums.
Types of Insurance Fraud
Insurance fraud takes many forms, including:
- Application Fraud: Providing false information on an insurance application to get lower premiums, such as lying about driving history, claims history, or the number of people in a household.
- Staged Accidents: Criminals deliberately cause car accidents to file fraudulent claims for injuries or vehicle damage.
- Inflated Claims: Exaggerating the value of items stolen or damaged to receive a larger payout than deserved.
- Fake Claims: Filing claims for losses that never occurred, such as reporting items stolen that were never owned.
- Premium Diversion: Insurance agents who collect premiums but fail to forward them to the insurance company.
How Fraud Affects You
You might think that insurance fraud is a "victimless crime" that only affects large insurance companies. The reality is different:
- Higher premiums for all policyholders
- Reduced coverage options as insurers exit markets
- Longer claims processing times due to increased scrutiny
- Risk of physical harm from staged accidents
Protecting Yourself from Fraud
Here are ways to protect yourself from becoming a fraud victim:
- Work with licensed, reputable insurance agents
- Verify that your insurance company is legitimate through the NY Department of Financial Services
- Never sign blank insurance forms
- Be cautious of unsolicited contacts offering insurance deals
- After an accident, be wary of people who approach you offering medical or legal services
- Keep copies of all insurance documents
The Consequences of Fraud
Insurance fraud is a crime with serious consequences. In New York, insurance fraud can result in:
- Criminal prosecution and jail time
- Heavy fines and restitution
- Loss of insurance coverage
- Difficulty obtaining insurance in the future
- A permanent criminal record
Reporting Fraud
If you suspect insurance fraud, you can report it to the New York State Insurance Frauds Bureau or the National Insurance Crime Bureau (NICB). Many insurers also have fraud hotlines. Reporting fraud helps keep premiums lower for everyone and protects honest policyholders.
Be Honest
The best way to prevent fraud is to always be honest with your insurance company. Provide accurate information on applications, report claims truthfully, and never exaggerate losses. Your integrity helps keep the insurance system fair for everyone.
