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The Effects Of Insurance Fraud. Ever since insurance was invented, so was insurance fraud. The fraud which is connected to insurance fraud comes in different types, which includes life insurance fraud and auto fraud. This article is very beneficial for those people who have insurance since it will give them an insight of what fraud really is. Most of the time, when someone commits fraud, it is for financial gain. Because of the nature of insurance policies, they are rife with potentials for exploitation. Commonly, insurance policies are exploited by individuals claiming more loss than actually occurred, or inflating the value of the item lost. Soft fraud and hard fraud are known to be the two classifications involved in insurance fraud. As you have known, there are two classifications of fraud which is known to be the hard fraud and soft fraud, however, the most common and popular is probably the soft fraud. This type of fraud occurs when an insured party inflates an already legitimate claim. Soft fraud may happen if an individual does not tell the truth, for example, an individual was involved in a car accident, then he will claim that his vehicle had more damage than it actually has. There are different thing that may happen if an individual who purchased a policy has misinterpreted the actual situation in order to get a lower premium, with this kind of situation, the soft fraud can happen at the start of a new insurance policy. An example of this is if someone is buying a car insurance policy but lies about the number of miles on the vehicle to obtain a lower premium.
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When someone plans a loss to receive an insurance payout, then hard fraud may occur. This kind of fraud usually happens to a stolen vehicle. Hard insurance fraud are usually involved in different forms of crimes.
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It is undeniable that one of the most popular fraud there was is the auto insurance fraud. Did you know that in the year 1996, around 36 percent of auto insurance claims were fraudulent in some way. Aside from everything that is stated above, a fraud can also be considered when a person claims an accident that did not actually happened, or maybe, if a person registered his or her automobile to a place where the insurance in cheaper. For instance, in order for the person to gain a lower premium, he will register his vehicle to a rural area even though he is residing in the city.


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