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Insurance fraud

In this article, we look at some of the most common types of insurance-related fraud.
© Coventry University. CC BY-NC 4.0

Insurance-related frauds happen when false claims are made to insurance companies.​

What constitutes a false insurance claim?

A false insurance claim could involve:​

  • Claiming that more has been lost than actually has​
  • Making more than one claim for the same item(s)
  • Deliberately destroying an insured asset in order to make a claim
  • Providing false information to an insurance company in order to get insurance cover on more favourable terms​
  • Deliberately under-insuring to reduce the premium. This type of insurance fraud could include motor vehicle, commercial, household and other personal insurance claims.

Common insurance frauds

Some of the most common insurance frauds are listed below:

Motor insurance fraud Opportunist claims (claims made by people who have not committed a crime before but discover an opportunity to defraud the insurer) are supplemented by claims orchestrated by highly organised and sophisticated criminal gangs.​
Staged accidents These are commonly known as ‘crash for cash’. Depending on the complexity of the fraud, two or more individuals will deliberately crash their vehicles into each other, potentially resulting in claims for damage caused, injuries sustained, car hire costs, vehicle recovery, storage etc.​
Insurance application fraud A policyholder dishonestly misrepresents or fails to disclose material facts in order to lower the insurance premium. This can include non-disclosure of claims history, points on a driving licence, and/or car modifications.​
Faked death A criminal will take out a life insurance policy on herself/himself and make their spouse the beneficiary. After the policy has been in effect for several months, the insured criminal fakes their death and their spouse is paid the death benefit. When the funeral is over, the spouse suddenly disappears and the insurance company is out the death benefit.
© Coventry University. CC BY-NC 4.0
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