Insurance Fraud: The Cold Hard Facts

Have you ever wondered why your insurance policy goes up from time to time, even if you have not had any driving violations? Insurance fraud is one of the major reasons for an increase in your premium. Insurance fraud is the second most costly white-collar crime in the United States, and is second only to income tax evasion. Because this crime so expensive, it costs policyholders more and more with each passing year. But what exactly is insurance fraud?

Insurance fraud can happen in many different shapes and forms, but mainly happens when an individual or company attempts to gain financial restitution, from an insurance policy, through deceptive means. In other words, when someone makes a phony claim. Each different type of fraud in the insurance industry will apply to a different type of coverage. Some of the most targeted types of insurance, when it comes to fraud, are automobile, healthcare, home, fire, and life.

According to recent statistics, as many as 10% of all claims that are filed each year end up being fraudulent. The most common type of insurance fraud is Health insurance, and costs its policyholders over $58 billion per year. Added to that is the fact that for every blatantly deceitful claim filed, there are several more exaggerations, which cost policyholders even more money. This normally happens when a person who has a legitimate claim tries to inflate claims after they find out that there is a good chance that their original claim is likely to be accepted.

Recent research has shown that as many as one out of every three bodily-injury claims from car accidents involves some form of fraud. What most people don't realize is that when they file a false claim, they are not actually taking money from the insurance company, but rather from themselves. They fail to understand that whenever people file a false claim, the excess monies are reflected throughout the entire industry. These additional costs are enforced upon the consumer, or you and I.

As a direct result of this, policies become more and more expensive each and every year, making deductibles higher and coverage more costly. Recent estimates have shown that just the cost of fraudulent assertions alone cost the average household between $900 and $1,100 per year. In other words, insurance fraud costs policyholders $75-80 billion dollars per year.

What would happen if this money could be reclaimed and used for other purposes? Well for starters, $80 billion dollars a year would be enough money to pay for every single individual in the United States to have a full medical examination per year. It would also be enough money to pay for 16 million days in an intensive care unit for individuals that really needed the service but could not afford to pay for it. Hopefully by now you get the picture.

Insurance fraud is a very destructive crime, and it seems that it gets worse and worse each year. If you are a witness to insurance fraud, please be sure to report the crime to the proper authorities, because ultimately you are going to be the one to foot the bill.