Defining Insurance Claim Fraud

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Insurance claim fraud is any situation in which you make a legal claim to collect compensation or benefits from your insurance company that is not deserved or legitimate. Insurance is designed to provide you with payments for specific things defined in your policy. For instance, liability insurance is designed to pay for damages that you cause to someone else as a result of a vehicle accident. Personal injury protection (PIP) is designed to pay for medical bills and lost wages that you incur as a result of an accident. If you did not actually have an accident, or if you exaggerated the losses incurred, then you are lying to collect money that is not truly owed to you under the terms of the policy you bought. This is fraud. 

Examples of Insurance Fraud

There are several common types of insurance fraud that occur. Some examples include the following:

  • Lying about the events leading up to an accident/incident: This can cover a wide variety of situations. For example, you might lie about who was actually driving your car if you know that telling the truth will result in you not being able to file a claim, such as if you let your drunk friend drive your car and you switched places quickly after the accident before the police or the other driver came over.  You might also lie about the circumstances surrounding your car being stolen if you decided you didn't want the car anymore and left it in a bad neighborhood with the keys in it. 
  • Lying about the cause of the accident. Many people try to stage accidents in order to collect insurance benefits. For instance, you and your friend might decide that you are going to pull out of a parking space and hit his/her car so that your friend can pretend to be injured. When your friend gets compensation from your insurer for the injury, then you two can split the money. In cases such as this one, you and your friend can both be considered guilty of insurance fraud. In order to try to prevent this type of fraud, family members are generally not permitted to sue each other after an accident. 
  • Lying about the extent of the injuries you suffer. If you are collecting either from your own insurer (through PIP or medical coverage of some type) or through someone else's insurer because that party was at fault, you may try to exaggerate your injuries so that you get more compensation. This can be done with injuries concerning soft tissue damage or whiplash, for which there are no conclusive medical tests to prove the existence of extent of the injuries. Lying about whiplash is so common that it is actually hard for people with legitimate whiplash injuries to get compensation because insurers are always wary of fraudulent claims. 

Protecting Yourself from Fraud

In some instances, insurance fraud rings have actually been created in order to try to milk the insurance system. There are a host of schemes that are done to try to collect on the insurance of innocent parties who have nothing to do with the scheme, so all drivers need to be aware of common scams in order not to become an unwitting victim of an insurance fraud scam artist. Some examples of common scams include the following:

  • A "swoop and squat", in which a driver pulls out in front of you very quickly and than brakes, causing you to rear end the vehicle. 
  • A situation in which a party waves you out of a parking spot or onto the road when you are waiting at a driveway and then as soon as you start to drive, speeds up and causes you to hit him/her. The driver would then deny ever having waved you out and state that you pulled out without looking.
  • Swipes in double left turn lanes in which a driver will purposely get in your way so you drive into the side of his/her vehicle. 

While you are not guilty of insurance fraud yourself in these situations, they can tarnish your driving record and cause your insurance premiums to go up. 

Getting Help

If you are involved in a vehicle accident and you believe insurance fraud is involved, you need to speak with a lawyer. Your lawyer can help you do everything in your power to protect your rights.