6.3.10 Insurance fraud

"When an insured person makes a false claim, no one gets hurt." True or false?

False! Insurance fraud hurts honest policyholders by driving up the cost of insurance for everyone.

Definition

• Insurance fraud: Any act committed with the intent to fraudulently obtain payment from an insure

Insurance crimes range in severity, from slightly exaggerating claims to deliberately causing accidents or damage. Examples:

• A person who is involved in a collision claims more damage than was really done to the car.
• A person deliberately sets a fire in order to receive payment for damages.
• Someone fails to disclose information, such as a previous medical condition, to obtain insurance that he or she would not qualify for.
• A health care provider that bills for services that were not provided.

The consequences

Insurance fraud is a crime, and there are serious consequences:

• If a false claim is proven, the insurance company won't pay the claim and may cancel the policy.
• If a false claim is made, the insurer can sue for any costs and damages.
• A false claim can result in jail or large fines, and a criminal record that can affect the future prospects of anyone found guilty.
• Insurance companies may refuse to sell insurance to people involved in false claims.

How to protect yourself

Insurance scams can take many forms. Here are a few tips on how to avoid them:

• Be careful if a salesperson pressures you to replace the insurance you have with something else.
• Beware of any email message that claims to be from your insurance company and asks you to confirm or give personal information. It is likely an attempt at identity theft.
• Do not pay your premiums through a money transfer or money wiring service.
• If you suspect that an insurer or service provider is engaged in an insurance scam, contact your provincial or territorial insurance regulator.