The Coalition Against Insurance Fraud estimates insurance fraud costs insurers $80 billion each year. Insurance fraud is a crime that affects all coverage lines - auto, homeowners, workers' compensation, health, and life.
There are two broad categories of insurance fraud Hard fraud involves criminal activity, and occurs when an individual fakes a loss to collect money illegally from an insurance company. Examples may include a staged accident, fake injury, made-up theft, arson, false billing, or needless medical procedure. Soft fraud takes place when a normally honest person tells a 'little white lie' to pay lower insurance rates or obtain a bigger claim settlement. This could mean under-reporting vehicle usage, misrepresenting information on the insurance application, overestimating damages, embellishing loss details, and more.
Insurers and government agencies at local, state, and federal levels invest significant resources in the fight against insurance fraud. Individual attitudes and actions have an impact as well. For example: