"No one is harmed when an insured person makes a false claim." Is this true or false?
False! Insurance fraud harms honest policyholders by increasing the overall cost of insurance.
Definition
Insurance fraud: Any act committed with the intent of defrauding an insurer of payment.
Insurance fraud can range in severity from slight exaggeration of claims to purposeful infliction of injury or damage. Examples:
- When a person is involved in a collision, he or she may claim more damage than was actually done to the vehicle.
- A person intentionally starts a fire in order to obtain compensation for damages.
- Someone withholds information, such as a prior medical condition, in order to obtain insurance for which they would not qualify.
- A provider of health care who bills for services that were not rendered.
The resulting consequences
Insurance fraud is a serious offense with severe consequences:
- If an insurance company discovers a false claim, it will deny the claim and may cancel the policy.
- If a false claim is filed, the insurer has the right to sue for all associated costs and damages.
- False claims can result in jail time or hefty fines, as well as a criminal record that can negatively impact an individual's future prospects.
- Insurance companies may decline to sell insurance to individuals who have made fraudulent claims.
How to safeguard yourself
Insurance scams come in a variety of forms. Here are some tips for avoiding them:
- Take caution if a salesperson attempts to convince you to replace your current insurance with something else.
- Be suspicious of any email message purporting to be from your insurance company and requesting confirmation or personal information. It is highly likely that this is an attempt at identity theft.
- Paying your premiums through a money transfer or money wiring service is not acceptable.
- If you suspect an insurer or service provider of engaging in an insurance scam, you should contact your province or territory's or territory's insurance regulator.
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Insurance