Insurance Fraud Isn’t Just a Corporate Problem; It Hits Everyday Policyholders Hardest
Consumers and insurers can become victims of insurance fraud. However, even responsible policyholders are feeling the impact through rising premiums as insurers make policyholders cover overwhelming fraud losses. Protect yourself from insurance scams, including forced auto crashes and fake policies, and learn how to mitigate rising rates by optimizing your home or devices that monitor your driving habits.
NPR Illinois reported that each day that passes during a pending claim, insurance companies earn over $52 million in revenue. Instead of sitting back and letting insurance companies take money out of your pocket, learn how to reduce premiums and understand the signs of an unscrupulous or fake insurer. Like any other service, you can shop around for a policy that meets your needs and doesn’t make you pay for other people’s fault.
Why Should You Worry About Insurance Fraud?
Regardless of how honest you are, you can still be affected by insurance fraud, as overwhelming deception impacts everyone’s wallet. Insurers are raising everyone’s premium prices to cover their fraud losses.
That means your home budget can skyrocket by hundreds of dollars monthly, whether it’s for health or auto insurance. Plus, if you’re dealing with an unprincipled insurance company, you may not get compensation you’re eligible for after making your monthly premium payments.
Watch out on the road. One of the most common insurance scams involves someone slamming on their brakes ahead of you to force a car wreck.
Victims of identity theft may unknowingly become part of complex medical or audio schemes.
Where Is It Most Common?
Workers’ compensation is a viable resource for workers injured on the job, from slip and falls to cuts or work-related collisions. A worker can benefit from workers’ compensation claims that cover lost wages and medical coverage for injuries. However, some fake workplace injuries or lie about their ability to go back to work to keep receiving those benefits.
Another scam is in healthcare, with medical facilities that conduct phantom billing for services never rendered. They may upcode and bill for unnecessary medical treatments, especially in Medicare.
Some people purposefully stage car accidents to collect a personal injury compensation claim. These scammers may exaggerate their physical injury and attempt to get away with inflated repair costs.
What Are Some Fraud Prevention Steps?
With so many data breaches happening at the individual and company-wide level, you can protect yourself with an identity theft insurance policy, which can be a specialized coverage or add-on. It should cover out-of-pocket expenses from lost wages to legal fees incurred while trying to restore your identity.
The right plan can reimburse you for unauthorized electronic fund transfers or stolen cash, but not fraud before your policy coverage starts.
Check out options like LifeLock Aurora for ongoing credit monitoring, while property insurance policyholders may get add-ons.
Before signing up for an insurance policy, ask to see credentials and double-check with your state department.
If an insurance dispute goes to court, an expert witness for insurance cases provides valuable objective insight that can help prove or disprove deceptive actions. Regular bill and invoice auditing can catch overbilling and payments for services that have never been performed.
How Can You Handle the Fallout from Fake Insurance Cases?
The first step in discovering you’re part of a fake insurance case is securing your finances and notifying the right authorities, such as your:
- Bank
- Credit card company
- Police
Lock your credit file via Equifax or TransUnion if your identity or Social Security number has been compromised.
Gather as much evidence as you can that includes:
- Names used by scammers
- Dates of incidents
- Receipts
After a vehicle accident scam, gather all your documentation as you would for a legitimate accident.
If you suspect you’ve been dealing with a fake insurance agent, compile all your correspondence, which includes emails and policy agreements.
Report them to your:
- National Insurance Crime Bureau
- Federal Consumer Protection
- State Insurance Department
Nationwide Effect of Scams
Don’t feel totally helpless in the face of rising premiums used to offset other fraud that doesn’t directly impact you. Keep shopping around for other policies with other carriers to see who offers the best rates regarding your premium and deductible.
Consider opting into telematics programs, which are apps or devices for tracking your specific driving behavior. If you practice low-risk habits, the insurer has to price your premium based on that and not on others’ risky actions.
Impress your home insurance underwriters by fortifying your home with updates like:
- Impact-resistant windows
- A stronger roof
- Monitored security systems
- Safety alarms (fire and carbon monoxide)
- Replace outdated wiring
Frequently Asked Questions
What Happens if There Is Insurance Fraud?
There are different types of insurance fraud that include hard, soft, and application fraud. Hard fraud is planning or causing a fake event such as a car crash or fire to get compensation.
Soft fraud is lying or padding the truth, such as exaggerating an injury during a real accident. Application fraud is when someone hides important facts when purchasing a policy.
The first step in dealing with fraudsters is an investigation, which can result in a misdemeanor or a felony depending on the extent of the crime. Penalties may include heavy fines or paying back all the money awarded from a claim.
How To Fight Insurance Claim Denials?
The first step in fighting your denial is reviewing a letter and finding the exact rejection reason. Call customer service to check for errors and note deadlines; internal appeals must be filed within 180 days from the notice.
Build up your case by getting support from your medical provider and collecting evidence.
Fake Insurance Cases Hurt Everyone
Insurance fraud hurts everyone regardless of how scrupulous they are in their day-to-day handling. From auto to home to health insurance, people are feeling the impacts of rising premiums, which you can mitigate by optimizing your home security and weatherproofing, tracking driving behavior, and protecting your identity from fraud.
Look out for fake insurers and bad policies that won’t pay out after you’ve paid premiums. You can also fight a claim denial that you deserve.
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