Insurance is also a form of financial product that explains why instances of fraudulent activities are common in different states. Whether you purchase home insurance or health insurance policies, both the insurer or the policyholder may become the victim of fraud.
Fraudulent activities can lead to criminal cases. Therefore, it is wise to know which activities can be considered fraud, so that you do not end up committing the same inadvertently. In this article, we would discuss different examples of health and home insurance frauds.
In case you are willing to purchase any insurance policy, seeking professional help might help you stay on the right track. You may reach out to the insurance specialists at Surex on this site for dedicated support.
Fraud In The Context Of Insurance
In the context of insurance, fraudulent activities may take place in different forms. Most of the time, it is deliberate or willful, intended to make some sort of financial gain. Both the insurer and the policyholder may commit fraud.
If detected, the miscreant would be punishable under legal provisions. Well, insurance deals largely depend on how people keep promises and value trusts. The ultimate objective of insurance is to offer protection to every party.
Both the company and the policyholder may bear losses in case of fraudulent activities. Besides, these activities go against the core values of insurance, such as good fault, insurable interest, indemnity, and proximate cause.
What Is Home Insurance Fraud?
Home insurance fraud may be triggered if you knowingly submit a claim that is already inflated, considering the renter or homeowner’s policy. In case you submit a misleading or false claim, it would be dubbed as homeowners fraud.
Some of the common examples of insurance fraud for homeowners include the following.
- Damaging a property intentionally for making a claim for monetary gains.
- Furnish false or misleading information about the cause, extent, location, or date of the damage.
- Overstate the amount of money in case of burglary, considering the stolen items.
- Staging a fake burglary at your home, or reporting false damages to your property.
- Requesting the repair professional to increase the bill estimate to cover deductibles.
- Fabricating evidence for supporting false claims involving receipts or bills in collaboration with dishonest plumbers, contractors, insurance adjusters, or repair professionals.
- Concealing evidence pertaining to the use of a property for commercial or rental purposes.
What Is Health Insurance Fraud?
Health insurance fraud takes place where a medical service provider or insured individual furnishes false or misleading information. Of course, the intention would be to make undue monetary profits. Health insurance frauds also include abuse, which are practices that raise the expenses directly or indirectly.
Besides, healthcare providers may also indulge in fraud.
- Often, these organizations provide patients with medically unnecessary services.
- Fraudulent activities also include the failure to maintain professional standards while charging unfairly.
- Other types of abuse in health insurance include excessive diagnostic tests or unnecessary or extended stays at hospitals.
- Frauds may also take place when the hospitals admit outpatient or daycare patients to hospitals.
Different Types Of Frauds Under The Health Insurance Sector
Frauds in the health insurance domain may include the following.
Medical Identity Theft
In the case of medical identity theft, the name of a policyholder is used without the person’s knowledge or consent to get access to treatments or medical services for free. Therefore, false claims are made to the insurer to gain services for free. This means that the medical records of the policyholder would have false information updated.
Internal And External Frauds
External frauds indicate fraudulent activities that the beneficiaries, service provider, or the customer may make against the insurer. On the other hand, insurers or agents make internal frauds against the customer or policyholder.
Application fraud takes place when a customer furnishes false information deliberately (despite possessing the correct information) while purchasing the policy. This false information may be related to previous claims, medical conditions, pre-existing diseases, or date of birth. At times, insurance agents encourage their clients to pay lower premiums by suppressing facts.
Claim frauds are targeted to insurance companies when a policyholder claims coverage that the person would not be entitled to enjoy according to the norms of the policy. This type of fraud happens to be one of the gravest issues that insurance companies encounter these days.
Eligibility fraud involves the furnishing of wrong information to become eligible for certain schemes or policies. For instance, a policyholder may provide a different status or employment, so that he or she can gain additional benefits in a health insurance policy.
What Impact Can Health Insurance Frauds Have On You?
One should know that fraudulent activities have an impact on taxpayers, patients, as well as the government. Healthcare frauds for consumers indicate shelling out higher rates of premiums, taxes, and expenses out of the pocket. Some of the other implications in this context include:
- Untimely exhaustion of the benefits of your medical insurance policy
- Undergoing unsafe or unnecessary medical treatments and processes
- Getting wrong or inaccurate data added to your health records
- Getting the wrong medical treatment
- Failing physical tests for job purposes unexpectedly
You can also be declared as uninsurable due to medical identity theft. This is an extreme situation where no insurer would bear the risk of insuring you again. Thus, you would be exposed to the risks of unfortunate events without an appropriate insurance policy. Even if you do manage to get one, the premium rates would be exorbitant.
As evident from the above article, insurance frauds might impact you as a policyholder, or the insurer if you are at fault. Considering the stringent legalities in place, insurance specialists recommend policyholders to take guard against furnishing false information or indulging in any fraudulent activity.
Moreover, these experts guide policyholders to choose the right insurance packages from reputed insurers, considering their respective budgets. In the process, you can remain on the safe side when you make the purchase. If you consult professionals, you can ward off the chances of being a victim of insurance fraud.