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Ever since insurance began as a commercial industry with the intent to protect cars, homes and people against unforeseen circumstances, people have been trying to defraud insurance claims.  Insurance fraud is done with the intent to unfairly obtain payment from the person that is insured (or their insurance company).  The motive of most false insurance claims is almost always financial profit.

When someone recovers money falsely from an insurance company, the insured gets a nick on their insurance record and is therefore charged more for insurance in the future.  Also, the insurance company pays out funds illegitimately.  When the insurance company has to spend money wrongly, those expenses get passed off to the consumers as higher rates.  These fraudulent claims account for a large portion of the claims that are currently received by all insurers.  It accounts for billions of dollars every year.

A lot of insurance fraud occurs when someone’s property is over insured.  When the amount issued is greater than the actual value of the property that is insured, it opens up opportunities for insurance fraud.  The person holding the property and insurance can intentionally destroy the property knowing that the payment received will be greater than what the property was worth.  This is sometimes hard to avoid too if the insurance company or their agent encourages being over insured to increase profit margins.  However, the insurance company can also be susceptible to the fraud because these claims can be made to look like any other claim and will be paid without anyone knowing it was intentional.

There are many types of insurance fraud and they occur in all areas of insurance.  The most common form of insurance fraud is inflating of loss.  It is impossible to put an exact value on the amount of money that is stolen from insured persons and insurance companies through fraud.  Because of the nature of insurance fraud, it is designed to be undetectable.  There is a seemingly infinite number of insurance fraud crimes committed that are never discovered.  It is estimated that between 3% and 10% of health care insurance is fraudulent which amounts to close to at least $51 billion.  It is further estimated that 10% of the property and casualty insurance are fraudulent and this could result in up to $30 billion.

Often, insurance companies have an entire department that investigates insurance fraud.  Most of the time these companies have on staff or employ outside private investigation firms to help them investigate the parties and circumstances surrounding the claim.  These insurance investigators handle claims in which the insurance company suspects fraudulent or criminal activity.  These cases can involve arson, inaccurate workers’ disability claims, staged automobile accidents, or unnecessary medical treatments. The severity of insurance fraud cases can vary greatly and require these investigators to use the utmost discretion.  They also must keep accurate records to use as proof later.  Sometimes the person making the claim was simply overstating damage to a vehicle.  However, these cases can range all the way to complicated fraud rings supported by dishonest doctors, lawyers, and even insurance personnel.