What Is Insurance Fraud?
Although most people who file a claim for insurance are doing so because of a genuine issue, many are not. Insurance fraud is an expensive and never-ending problem that costs not only the insurance companies more and more money each year but also the individuals purchasing insurance.
One of the reasons premiums on all types of insurance increase each year is because of the insurance scams. But do you know what is insurance fraud?
There are several different types of insurance fraud. Each applies to a different area of the insurance arena. Automobile insurance fraud, life insurance fraud, home insurance fraud, and health insurance fraud all are becoming more and more popular as dishonest individuals continually concoct new and effective ways to defraud their insurance company.
Automobile insurance fraud encompasses several different types of fraud. One popular insurance scam that falls under the umbrella of auto insurance is individuals looking for preoccupied drivers and then ensuring an accident occurs.
The victim, in this case, the unwitting driver, suffers most from this type of insurance fraud as their insurance company is responsible for covering the cost of damages and in many cases, pain and suffering compensation as well.
The second type of insurance fraud centers on life insurance. This is one of the least popular types of insurance fraud mainly because it involves a great deal of elaborate planning and scheming. Typically though, life insurance fraud involves making a claim when the person is still very much alive.
Home insurance fraud is becoming more of a problem as individuals are looking to their insurance companies to provide coverage for thefts or home damage that is staged. The most problematic form of home insurance fraud involves break and enters that are actually arranged by the home owner. The home owner makes a sizable claim against the policy and the insurance company ends up paying for the lost items or repairs.
The last type of insurance fraud is health insurance fraud. This is arguably the most popular type of insurance scam as it involves an individual’s complaining and suffering from aches and pains that can’t be proven nor disproved by a qualified physician. This type of insurance fraud can be long-lasting and a person can receive unsubstantiated benefits for many years.
Every type of insurance fraud causes millions of dollars in lost money for insurance companies each and every year. One of the most disheartening consequences of insurance fraud is that it costs everyone money, not just insurance companies.
When an insurance company is forced to pay out more and more in the way of claims, they have little choice but to raise premiums for the rest of the customer base.
This is an issue that affects everyone, regardless if they participate in insurance fraud or not. Although the penalties for being convicted of taking part in an insurance scam are severe, an increasing number of cases are happening each and every year.
Common Examples Of Life Insurance Fraud
The majority of individuals who take out a life insurance policy do so with the intent of using the policy to protect their loved ones in the event of their death. Unfortunately, there’s another group of people who secure a policy with the intent to defraud the life insurance company.
Although this type of life insurance fraud costs insurance companies handsomely each year, it also raises the premiums for everyone.
There are several different types of death insurance fraud and each presents its own host of complications for insurance companies. One type of insurance fraud centers around an individual taking out a large policy and then death occurs shortly after.
This is more common in cases where a no-medical insurance policy is in effect. Someone who is suffering from a life-threatening illness secures the insurance and then passes away before the initial waiting period is up.
In some of these cases, the beneficiaries have sued and have won an insurance settlement. In other cases the individual dies shortly after the waiting period has passed, again raising the suspicion of the insurance company.
Another type of life insurance scam that is becoming increasingly popular is in the case of a missing person.
Generally, this type of insurance fraud begins with the individual securing one or more high paying policies. After the waiting period on each policy has lapsed, the person goes missing. The authorities are contacted and a missing person report is filed.
In some locales, it can take up to seven years to declare a missing period dead, which means the beneficiary has to wait that long to obtain the proceeds of the policy. However many people have taken suit against life insurance companies to have that time limit reduced.
If the death appears to be part of an elaborate accident, such as a car falling in a river or an explosion, the person may be declared sooner. With this particular type of death insurance fraud, the insured is obviously still alive.
Murders do occur and are at times connected to life insurance policies. Life insurance fraud that involved someone obtaining a policy in the name of another through the use of forgery happens as well.
In this case, the insured has no idea what their life is insured for a large amount. After their murder, the beneficiary tries to claim the proceeds from the policy.
In many of these types of cases, the proceeds are frozen until a police investigation into the murder has been completed. Again, the beneficiary can sue and if a judge believes they weren’t responsible for the death, an insurance settlement may be reached.
The majority of the population will never take part in any type of life insurance fraud, but it does happen. Unfortunately, the few who do participate drive up the cost of premiums for everyone.
The Problem Of Auto Insurance Fraud
One of the biggest problems facing the automotive insurance industry today is a fraud. More and more people are becoming involved in this illegal activity because it can be incredibly lucrative. There are several different types of auto insurance fraud and in some cases, not only the insurance company falls victim but innocent motorists do as well.
Car insurance fraud has been a long-standing problem but as criminals become more sophisticated they are constantly developing new ways to bilk the automobile insurance industry of millions of dollars each year.
In addition to insider vehicle theft and planned collisions, individuals are also causing more damage to their vehicles after minor collisions. It can be difficult for insurance companies to prove that fraud is actually taking place because some of the accidents and thefts seem genuine.
One type of auto insurance fraud that has been around for decades involves collisions that are planned. In most cases, one of the people involved is oblivious to the fact that the accident was set-up. The most common type of accident like this is a rear-end collision.
The person who intends to commit insurance fraud positions themselves in front of someone. In many cases, they choose someone who seems preoccupied. This might be someone looking at a map or talking on their cellular phone while driving.
Then the first driver slams on their brakes and the unwitting driver behind them smashes the rear end of their car. Not only is there substantial damage but the driver will usually sue for pain and suffering because of injuries as well.
Another well-used type of auto fraud involves the individual who is the victim of an accident causing more damage after the fact. This can really only be done if the initial damage caused by the collision is minor. The person who intends to commit auto insurance fraud is involved in an accident where the other party claims responsibility.
Since the damage is minimal they agree to exchange insurance information and leave it at that. At a later point, before contacting the insurance company, the individual who wasn’t at fault causes more extensive damage to their vehicle so they can claim a larger amount. Since the authorities weren’t called in the first place, it can be almost impossible to prove when the damage occurred.
Vehicle theft, or making arrangements to have their own vehicle stolen is another type of motor vehicle insurance fraud that some people take part in. They pay someone to take their vehicle for a price. One they submit a claim to the insurance company they are given a check that reflects the current value of the vehicle.
This is particularly common when it involves a car that is a bit older that may have serious repair needs. Instead of paying for the costly repairs or trying to sell the vehicle for parts, the individual decides to take part in this illegal activity.
Being aware of the different types of auto insurance fraud can help innocent people who find themselves victims of this type of behavior. If someone does feel they’ve been a victim of this type of activity, they need to report it to the authorities.
The Cost Of Personal Injury Insurance Fraud
In recent years most of us have noticed an onslaught of television commercials and print ads for personal injury attorneys. These legal professionals advertise their services to help individuals who have fallen victim to injuries from accidents. The majority of cases of personal injury insurance claims center on automobile accidents.
Unfortunately, even with all the legitimate claims of injuries from accidents, there are still many cases of personal injury insurance fraud taking place.
There are several different types of personal injury insurance fraud. Some are initiated by an individual who is involved in a motor vehicle accident and realizes the potential exists for them to reap a benefit by appearing more injured than they are.
The other type of personal injury insurance fraud is the result of a scheming medical professional or attorney who decides to take advantage of an insurance plan and take more than their client is entitled to. In both these cases, the victim is usually hired to play the part of the injured individual in exchange for a set fee. The victim is a willing participant who is therefore just as criminally responsible as the attorney.
When a person suffers a car accident injury there are several different approaches that are often taken. The first involves the person dealing directly with the insurance company that is representing the individual who hit them.
The opposing party’s insurance company will make a monetary offer that covers both medical expenses and pain and suffering. If the injured person takes the offer, the case is closed.
The second and increasingly more popular approach involves hiring a car accident injury attorney. These are lawyers who specialize only in handling personal injury claims. They represent the injured when it comes to negotiating with the other insurance company.
In some cases, the accident attorney will convince the victim that their injuries are far worse than they really are and that the amount they should seek in pain and suffering is extreme. This is an obvious case of personal injury insurance fraud.
With any case of personal injury claims, the person who is injured has to seek medical help. This is where the doctors who are involved in personal injury insurance fraud step into the picture. These doctors will adjust the medical records of the individual to reflect injuries that are more complex and that have far-reaching effects.
In exchange for doing this, the claimant agrees to hand over a portion of the proceeds of their personal injury claim to the medical professional.
As this type of crime increases, the number of people is expected to pay for auto insurance premiums also rises. It’s really a no-win situation for the millions and millions of motorists who don’t participate in this deceitful practice.
The Various Types Of Unemployment Insurance Fraud
When most of us think of unemployment insurance fraud we instantly attribute it to mean someone collecting unemployment insurance benefits that they aren’t entitled to. Fraud does include those instances but the problem of unemployment scams is far-reaching and criminals are developing new ways to bilk the system of money every year.
Although there are things that everyone can do to combat this problem, it’s important to first understand how to recognize all types of unemployment insurance fraud.
Every year thousands of people lose their jobs for various reasons. It may be because the company is closing or downsizing. Also, some individuals are only hired on a temporary basis to replace someone who has taken a maternity or sick leave.
These people are justified in filing for unemployment benefits and as long as they meet the requirements, they will start to receiving checks which are designed to aid them until they find a new job.
Some common forms of unemployment insurance fraud involve individuals who decide to cheat the system on their own. The most common type of fraud centers on someone who is collecting benefits while working.
Obviously it would be impossible to have a regular job and collect benefits because the government would notice the income coming in very quickly. In most cases people who decide to commit this type of fraud take on small cash-only jobs.
They then neglect to mention this on their unemployment forms and continue to accept full benefits. Although many people don’t really view this as unemployment fraud because their cash-only income is so low, it is fraudulent and the individual could be prosecuted.
People who aren’t available as they should be while they are collecting unemployment benefits are partaking in fraudulent activity as well. These individuals may decide to take a vacation or stay home tending to their children.
An activity like this makes them unavailable for interviews. When a person is collecting unemployment insurance benefits they must be available during regular work hours.
This also applies to when a person is called for a job. If someone is collecting unemployment benefits and then refuses a position that is viewed as a fraud as well.
The point of unemployment insurance benefits is to provide income until the individual can begin to work again. Failing to take a position in order to stay at home, is not acceptable.
There is a lot that the average person can do to help fight this type of fraudulent activity. One is to report anything they deem suspicious. This may be a neighbor or relative who is collecting benefits while working. One of the largest problems with the unemployment system is that for each case of fraud, everyone else has to pay. We all have to pay a portion of our paycheck into unemployment insurance and as long as the fraudulent activity continues, we can expect to pay more and more.
The Problem Of Workers Compensation Insurance Fraud
It’s estimated that workers’ compensation insurance fraud is one of the fastest-growing problems in the insurance industry. There are many different ways to commit this type of fraud and it seems as though not only employees but employers as well as medical professionals are taking part in these scams.
It can be difficult to detect, but if an individual is caught participating in a worker’s compensation insurance scam, they face very serious consequences.
Arguably the most common of this type of insurance fraud involves employees. When someone gets hurt on the job they are entitled to employee compensation from workers’ compensation.
The process is relatively simple in that the employee fills out a claim form, is then seen by a doctor and may speak to a representative from the worker’s compensation board. If the employee’s injury is serious enough to prevent them from working, they are often sent for additional tests as well as therapy.
When an employee decides to start a fraudulent claim with a company it typically begins before the injury even occurs. The employee will try and position themselves in a spot where they realize they are likely to get hurt.
In some cases, a real injury will occur, while in others, the injury isn’t real. The employee will certainly act as though they are in terrible pain and will then have to seek medical help.
This is where a doctor typically becomes involves. If the doctor is part of the insurance fraud case, he or she will exaggerate the individual’s injury on the documentation. The doctor may also indicate that tests or procedures were performed that never was.
The doctor collects their fee from the worker’s compensation board. They can require as many appointments as they like with the patient, as the worker’s compensation board does insist on regular medical treatment.
In many cases like this, the employee is only required to see their attending physician. This is one of the biggest problems with worker’s compensation insurance fraud in that the employee could have an arrangement in place with the doctor in which the doctor is receiving a portion of the benefits for ensuring the documents are filled out to reflect a serious injury.
Typically if the worker’s compensation board believes that fraud may be taking place they will launch an investigation. This investigation is likely going to require that the employee visit another physician, one that is assigned by the worker’s compensation board. If the patient has been feigning an injury all along, it will surely be realized at this point.
Employers contribute a fair amount to the worker’s compensation board each year in order to protect their employees. When employees cheat the system in these ways, it cost employers more.
Seniors Are The Target Of Long Term Care Insurance Fraud
As the general population ages, long term care insurance is becoming more popular. This particular type of insurance offers different levels of care to individuals who cannot care for themselves.
Everything from the services of a home care worker to a nursing home is covered under the blanket of long term care insurance. However, just as with other areas of the insurance arena, long term care insurance fraud is a persistent problem.
The reason that this type of healthcare insurance fraud has become such a serious issue is because of the age of the individuals who typically purchase this type of insurance. Most people don’t even consider long term care insurance until they are nearing retirement age.
Many skilled criminals have become highly effective at convincing older individuals to part with their money. With the promise of a long term health care plan that will take care of them in every way, many seniors are signing up.
Virtually every long term care policy has restrictions. It may be the type of care that will be provided or perhaps the amount of the care that is covered under the plan. When a person begins paying into a long term care plan thinking they are fully protected, only to discover later that they aren’t, there is little recourse.
Many people who initiate long term care insurance scams do so by including hard to meet requirements in the small print that accompanies the policy. These requirements vary from insurance company to insurance company, but they often include provisions that relate to the person’s health at the time they want to begin receiving benefits from the plan.
One popular long term care insurance fraud scam involves the claimant having to be diagnosed with a serious illness before any benefits can be paid. For someone in reasonably good health who has suffered an injury that requires the care of a home worker, this can be devastating. It’s not until they need the coverage that they actually realize they don’t qualify.
Another popular method that criminals employ is to state in the coverage that unless the person covered by the policy spends time in a hospital immediately before they are moved to a long term care facility, there is no coverage.
For many people, this simply isn’t going to be the case, and even a lapse of a day in between the hospital stay and admittance to the nursing care facility can deem the benefits useless.
The best approach to combating this particular type of long term care insurance fraud is for the insured to consult with an attorney before signing the policy agreement. Although this can prove a bit costly at the onset, in the long run, when they need to take advantage of the benefits, it’s priceless.
Recognizing Title Insurance Fraud
Whenever a property has purchased the issue of title insurance comes up. This type of insurance is in place to protect the buyer in the event that there is a problem with the title. In most cases, title insurance is never needed once the transaction has been finalized.
However, there are some real estate insiders who are taking advantage of this coverage. These individuals are taking part in title insurance fraud which is currently costing title insurance companies millions of dollars in bogus claims each year.
The premise behind property title fraud isn’t terribly complicated but in most cases, it involves several people all working together.
These people are often the real estate agent, the title company and in some cases even the lending institution. The only person not in on the scheme is the individual or organization buying the property.
A typical title insurance fraud will involve a home that is up for sale. When a person comes along who wishes to make an offer to purchase, the scheme begins.
Once the offer to purchase is finalized the process of securing title insurance begins. The buyer will likely be referred to as a specific title insurance company.
This company appears to be legitimate on the outside and their job is to secure a title insurance policy for the property which will protect the home owner should a problem with the title arise.
Meanwhile, the title insurance company is securing another offer through another real estate agent for the same property. Typically this second offer will come from someone who lives a distance away and is also very involved in the scam.
The second individual will also retain title insurance and it will be them who eventually begin the title insurance claim. These set-up situations often result in millions of dollars in lost money to title insurance companies each year.
Builders often take part in these schemes as well, through the use of newly built properties. They apply for a title loan and once the property is sold, the buyer does as well. Naturally, this procedure also requires a knowledgeable real estate agent.
Many states are cracking down on those who participate in title insurance scams. The most disconcerting aspect of this particular type of fraud is that many times the home owners are the ones who suffer the most. A person can actually have their title called into question if the property they purchased becomes the focus of a title insurance fraud investigation.
It’s incredibly important for anyone purchasing a home to be fully aware of the reputation of the title insurance company and agent they are dealing with. Another helpful hint is to locate their own title insurance company as opposed to blindly dealing with the one recommended by the real estate agent.
The Growing Problem Of Travel Insurance Fraud
Purchasing travel insurance is highly recommended for anyone planning to get away, whether it’s for a three-day quick trip or a month-long excursion.
Depending on the type of coverage that is bought, a travel insurance plan can protect an individual when it comes to unexpected medical care while at their holiday destination, delayed or missed flights as well as lost luggage.
There are several different types of travel insurance fraud but the most common involve travelers who aren’t truthful.
When a person, who has travel insurance, becomes ill while on vacation they are usually afforded benefits that will help offset the cost of medical treatments. The amount covered varies from plan to plan and also can be dependent on the type of illness.
Although it may seem difficult to believe, many people conduct travel insurance fraud by feigning illness and then working in close conjunction with a dishonest physician.
Some cases of travel insurance scam actually involve an individual planning a trip solely for the purpose of pulling this type of scam. Once the insurance claim has been paid, the dishonest doctor splits the proceeds with the claimant.
Arguably the most common type of travel insurance fraud involves passengers who lose their baggage. It’s no secret that thousands of pieces of luggage get misplaced by airlines each year.
For an honest traveler who loses their luggage, they are usually disappointed and at times distraught depending on what was inside the bag.
Some people who did purchase travel insurance see this as a way to get more than their bag is really worth. Not only will they generally inflate the price of the luggage itself but they are apt to also claim more for the contents.
The problem with this type of travel insurance fraud is that the insurance company has virtually no way of either validating or questioning the claim. They can only take the claimant’s word for it and if the coverage includes a high limit, the insurance company may be compelled to pay.
Even though there is generally a waiting period between when a bag goes missing and when the claim can be processed, most dishonest travelers who file false claims don’t fret. The reason is that only a very small percentage of luggage that has gone missing is ever actually returned to its owner.
Many everyday travelers who file these exaggerated claims wouldn’t consider themselves criminals but they are. Anyone who files a fraudulent claim with an insurance company is breaking the law.
Travel insurance companies are often left with little choice but to pay the claims as they are filed. This results in increased costs to them which ultimately is passed on to every traveler in the form of higher travel insurance costs.
The Basics Of Chiropractor Insurance Fraud
A rarely mentioned type of fraud, chiropractor insurance fraud actually costs insurance companies millions of dollars each year. This particular type of medical insurance fraud only applies to individuals who have chiropractor coverage in their policy. It is very similar to health care insurance fraud and many of those committing it are actually professional chiropractors.
The health care profession has realized in recent years that chiropractors have a place in overall body health. When a person is suffering from aches and pains, they are often referred to a chiropractor who uses physical manipulation to realign the body.
One of the appealing things about seeing a chiropractor is that it’s viewed as a form of alternative medicine and many people actually are able to forego taking prescription medications after just one or two visits with the chiropractor.
Much like a doctor or dentist office, the chiropractor’s office bills the insurance companies for services rendered. Therefore the most popular type of chiropractic insurance fraud involves billing errors or add-ons.
Some chiropractic offices order additional tests such as x-rays or MRI’s to determine the extent of an individual’s injury. Chiropractor insurance scams often involve billing for these procedures even when they haven’t been conducted.
There is a popular scam that runs through the medical insurance arena and it has also found its place in chiropractic offices. Staged automobile accidents often result in difficult to diagnosis injuries such as the soft tissue injury of whiplash.
Chiropractors are sometimes turned to in an effort to alleviate the pain associated with an injury like this. In the case of someone committing this form of insurance fraud, after the staged accident occurs, the individual visits the chiropractor who then bills the guilty party’s health insurance plan for large expenses that are deemed necessary for treatment.
Typically the person who was supposedly injured will receive a portion of the proceeds that the chiropractic office is bringing in. In a scam such as this, it’s easy to see that many different people take part.
This type of health care insurance fraud doesn’t appear to be as far-reaching or overwhelming as typical medical-related fraud simply because most health care plans actually don’t cover the expenses of a chiropractor or if they do, there is a small annual limit applied to expenses.
Patients can take an active role in helping to stop chiropractor insurance fraud by asking for a detailed list of all expenses being submitted to their health care plan.
It is well within the patient’s rights to request this and it can help to deter the chiropractic office from filing false or misleading claims on the patient’s behalf. The patient can also ask for this list from their health insurance plan if that’s more comfortable for them.
Dental Insurance Fraud Is An Ongoing Issue
Unfortunately, it’s fairly easy to become a victim of dental insurance fraud. In fact, most people who are victims never have any idea, even long after the fraud has been committed. The reason is simple.
When a person goes to see their dentist they trust that their dental health plan will be charged the correct amount for the procedures that are completed. However, many dental offices knowingly overcharge dental insurance companies so they can reap the rewards.
When a person first visits a new dental office they are almost always required to provide details about their dental health plan. This information usually includes the monetary limit of their yearly coverage as well as how much of a percentage they are responsible for. In almost every case of dental insurance fraud, the victims are those individuals who have 100% coverage on the basics.
The idea behind this type of insurance fraud is relatively simple. The insured visits the dentist for a minor procedure. This may be a yearly examination with a cleaning or perhaps a standard filling. The dental office may bill for these minor procedures but in this scam, they will add many extras onto the total bill that is submitted to the dental health plan.
Another way that dental offices perpetrate insurance fraud is by miscoding the procedures. Most dental claims are submitted electronically now which means the patient never sees or signs a claim form authorizing the expense.
Instead, the person responsible for submitting the claims at the dental office uses a system of standard codes to identify which tooth was worked on as well as what was done to it. By miscoding one or the other of these numbers, the insurance company receives a bill that is exaggerated.
Yet another way that dental offices conduct insurance fraud involves billing procedures that are performed on one patient to another patient. This usually involves one patient who has the information stored with the dental office but hasn’t visited in some time. The dental office then uses that person’s information to submit a claim for work done on another.
The dental healthcare plans that are involved typically approve and pay for the claims because the person whose name was used in the claim hasn’t yet used up their total for the year. Again, this is very hard to detect unless the patient receives a notice explaining their recent treatment expenses.
One big problem that law enforcement personnel face with dental insurance fraud is that the dental offices can always claim that they simply made a human error in the processing. This could hold weight in the case of the procedure being miscoded as well as charging the wrong patient.
Common Elements Of Disability Insurance Fraud
Almost everyone who is on disability insurance is justified in collecting benefits. Disability benefits are in place to help workers who find themselves unable to make a living because of an illness or injury.
There are many different conditions that make a person eligible for disability benefits, and among those, there are a few that are difficult to diagnose and treat. Criminals are taking note of this fact and are using these conditions to commit disability insurance fraud.
In all disability insurance claims, the claimant has the burden of proof on them to show that they are indeed unable to continue working as they have been.
In the case of someone who is suffering from something serious such as a heart attack or cancer, they can expect to receive disability benefits for a period of several weeks, if not months.
During this entire time, they are required to consult regularly with a doctor who supplies authorized updates of the claimant’s progress. The same is true of patients who suffer a serious injury, their doctor reports to the insurance company on their condition.
In the case of fraud, several different scenarios can take place. First, the doctor may be the one initiating the insurance fraud. This generally involves the doctor recruiting individuals who are eligible for disability benefits and then diagnosing them with conditions they don’t really suffer from.
The doctor continues to report on the patient’s well being to the insurance company and the patient then pays part of the benefits back to the doctor.
The more popular type of disability insurance scam involves claimants who feign an injury to collect their benefits. Obviously this can’t take place if the claimant is pretending to have cancer or a heart condition, but in the case of injuries, it can be done.
The patient typically visits their physician and complains of an ongoing pain problem. While the physician is in the process of diagnosis, the patient is told not to work. The doctor unwittingly fills out the required forms and the patient then begins to receive disability benefits.
Every time an individual fills out an application for disability benefits they sign the document proclaiming that all the information is correct.
This becomes vitally important if and when an insurance company realizes that they are a victim of fraudulent disability insurance claims. The individual then becomes liable for the benefits paid to date and also can be held criminally responsible.
Almost every case of disability benefit fraud will eventually be found out because when a person remains on disability for a long enough period of time, the insurance company will request further medical documentation.
This is typically in the form of a consultation with a physician the insurance company recommends. At this meeting, the ruse tends to be discovered.
When Employment Insurance Fraud Occurs
When a person applies for employment benefits they are doing so because they feel they are entitled to receive them. If they have paid into the program for the prescribed number of weeks and now find themselves without a job, they are likely going to receive some payments while they search for a new employment position.
The program is in place to aid individuals in their time of need however many people are taking advantage of it. Employment insurance fraud is an increasing problem.
In most instances of employment fraud cases the individual who puts in a claim to receive employment benefits commits some sort of dishonest behavior. One of the points that are strongly stressed to individuals receiving employment benefits is that they need to report any additional income they receive.
If this income is not reported they are then guilty of participating in insurance fraud. Even if they don’t think the amount is worth noting, it has to be reported by law. Failure to do so can result in serious consequences.
What some people do while receiving employment benefits is to take on small cash jobs. This means that they agree to work for someone with the understanding that the pay that is being offered won’t be reported to the income tax department.
The individual then has an income coming in from their illegal work arrangement as well as their employee benefits. Although this can take place in almost every industry it seems to be more popular in some of the trades as well as for people providing services like hair styling and childcare.
Another way that some people commit employment fraud is by being dishonest about the amount of extra income they are bringing in. If they work part-time as a server and are receiving employment benefits based on a full-time salary they may be inclined to only note the portion of their income they are receiving in actual wages.
Their gratuities also compromise a portion of their income and as such need to be noted on the employment insurance forms. This type of arrangement may be called into question and the individual may be required to explain why they haven’t documented any of their gratuities.
Not responding to training sessions or going to arranged job interviews also falls under the umbrella of employment insurance fraud. Many times, the representatives of the employment insurance office arrange programs that aid in helping the unemployed find work. If the person receiving the benefits continuously fails to attend these training sessions or interviews they may be guilty of committing employment insurance fraud, in which case their benefits will be suspended and they may face a fine.
The Hot Issue Of Fire Insurance Fraud
When an arson investigator is called to the scene of a fire it’s almost a sure indication that there is some suspicion that the fire was deliberately set.
Fire insurance fraud is the most cause of most arson fires and for quick thinking investigators, a big part of determining what happened involves the person who owns the building. Arson insurance fraud may seem difficult to prove but it’s actually not as hard as it first seems.
Whenever someone takes out a policy for commercial insurance or residential insurance there is almost always some coverage related to fires.
Fires are an unwelcome fact of life and in the case of an accidental fire, the property owner is entitled to make a claim so they can rebuild their home or business. Many dishonest individuals schemes to take these proceeds from the insurance company by initiating an arson insurance fraud scheme.
One of the first clues that a fire has been deliberately set lies in how it occurred. In almost every case of fire insurance fraud, the arson investigator is able to determine how the fire was set. This sets into motion an investigation to prove that fire insurance fraud is indeed taking place.
When someone puts forth the idea to participate in this type of fraudulent activity they usually insure their property for a sizable amount of money. Although the building itself can only be insured for the amount that it is currently worth, the contents can be insured for almost any amount.
Homeowners who are planning on committing fire insurance fraud will often take out an insurance policy that includes a large amount for their belongings.
After a fire has occurred they try to claim for the maximum of those benefits. Unless the fire has been deemed arson and the cause isn’t easy to determine, the insurance company may actually have to pay full benefits.
Many business owners who are facing hardship will resort to this type of illegal activity as well. In this case, the business owner takes out a policy that protects his premises from fire and then either sets the building ablaze him or herself or hires a professional to do it.
The fire will obviously be investigated and the business owner will place a claim for damages with their insurance company. If the fire is determined to be arson, the business owner may have to wait to collect proceeds until the case has been solved.
If no resolution is found after several years, the person who is the beneficiary of the commercial insurance policy can sue for the proceeds.
Although many people decide to take part in this type of insurance fraud they are almost always intelligent enough to ensure they have a concrete alibi.
This helps them during the investigation and can bode well when it comes time for them to fight for the proceeds of their fire insurance policy. Criminals that take part in this are obviously incredibly bold.
Far-Reaching Consequences Of Health Insurance Fraud
Health insurance fraud is one particular type of insurance fraud that may involve someone who is completely unaware of what is happening.
In many cases of health insurance fraud, an individual goes to see their doctor for a routine examination and the medical insurance plan they are covered by ends up receiving a bill for expensive medical procedures.
Because the majority of health insurance plans don’t communicate on a regular basis with their claimants, this particular type of insurance billing fraud can go undetected for years.
The premise behind this medical insurance fraud is really quite simple. Some medical professionals are very brazen and don’t even perform a fraction of the tests or procedures they ultimately bill the insurance company for.
In other cases, the doctor orders tests or procedures that they know are unnecessary, but they do so in order to defraud the health insurance company.
Typically in cases like this, the doctor’s office will order the same test on many patients in a short period of time. Because almost every patient has a different insurer, the claims aren’t scrutinized the way they may be.
The people who are commonly the victims of these types of insurance billing fraud cases are the ones who have a health insurance plan that pays everything in full.
Obviously a medical professional is not going to try and order unnecessary things for a person who is paying part of their medical expenses out of pocket. They would become curious and in many cases demand to know what the procedure was being done for.
Doctors certainly aren’t the only ones initiating healthcare insurance fraud though. Many individuals do it themselves when they feign an injury in order to collect benefits. In this case, the person has been paying into a health insurance plan that contains disability coverage.
Although this type of medical insurance fraud does occur with plans like Worker’s Compensation, Meidcaid, and Medicare, it’s much more likely to happen with private plans.
The people that are involved in this particular brand of the healthcare insurance fraud tree complain of aches and pains that are difficult for a doctor to diagnose.
Their reason for doing this is to remain on the disability insurance plan for as long as possible so they don’t have to return to work.
This type of medical insurance fraud is much more difficult to sustain for any length of time because a doctor will likely decide there is nothing medically preventing the individual from returning to work in due time.
Although there isn’t a lot that the average citizen can do to prevent health insurance fraud they can be diligent about asking their health insurance plan for a copy of their claims once a year. If they spot any inconsistencies, these should be reported to the plan administrator immediately.
Theft As Part Of Homeowners Insurance Fraud
Although many people forgo it in an effort to save money, homeowner’s insurance really is one necessity in life. It protects the most important investment most people will ever make. Homeowner’s insurance protects in the event of a fire or theft and when someone doesn’t have the proper coverage it can mean disaster.
Along with the protection that this type of insurance affords, there is another darker side to homeowner’s insurance. Homeowners insurance fraud is a very real and serious problem.
There are a few specific types of homeowners insurance fraud that seem to be more prevalent than others. The first involves a genuine claim that is exaggerated by the homeowner in an attempt to gain financially from their loss.
This can occur with either theft or as the result of a fire. If a break and enter happen in the home and several articles are stolen, depending on the insurance policy, the homeowner is expected to file a claim with the insurance company.
Most of these homeowners’ claims are valid. However, some homeowners view a situation like this as an opportunity to gain financially. Instead of detailing everything that was taken exactly as it was, they instead add extra items on that they never actually owned. It is virtually impossible for the insurance company to prove the claim isn’t valid.
Another variation of this occurs when the homeowner takes it a step further and arranges for the burglary to occur. In this instance, the homeowner is working in cahoots with someone else.
That person enters the home and not only steals certain valuables but also creates the illusion of a robbery. Furniture may be strewn about, glass broken and the lock tampered with. The crime is investigated and a police report is filed.
The homeowner then submits a claim to their homeowner’s insurance company. This type of property insurance fraud can be difficult to detect and even more challenging for the insurance company to prove.
When a homeowner claims for damages to their property as a result of a fire this is typically a genuine gesture. Most people could not even imagine arranging for their property to be torched in an effort towards monetary gain.
However, for someone facing financial hardship or someone who views this as a quick way to make money, they can easily hire another to do it for them.
This type of property insurance fraud will likely result in the homeowner claiming a large amount for the home contents even though they likely moved anything of extreme value out beforehand.
Although there is no solution that will erase this problem permanently, many homeowners insurance companies are now realizing that they need to fully investigate all suspicious claims. Every person who pays for homeowner’s insurance has to bear the cost burden for all these fraudulent claims.
How To Recognize Insurance Agent Fraud
Almost everyone looks to their insurance agent to give them solid and dependable advice. Unfortunately not all insurance agents are as trustworthy as they appear. Insurance agent fraud is a growing problem that is plaguing almost every area of the insurance industry. For many people, they have no idea they are or have been scammed until it is too late and their money is long gone.
Insurance agent scams can occur in several different ways but predominately it involves an insurance agent who convinces a client to purchase unnecessary protection. It is a rampant problem in all areas of insurance including auto, home, health, and life.
When an insurance agent contacts any potential client there is an already unspoken understanding that the agent will do his or her best to sell the client the most expensive policy possible. The reason is that most insurance agents work primarily on a commission basis, getting paid for each aspect of a policy they are able to sell.
In the case of insurance agent fraud, the problem reaches beyond just simple persuasion and into deception. The client who trusts the insurance agent to keep their best interest in mind purchases the coverage they are told is what they need. In most cases of insurance fraud, the client has absolutely no need for the expensive coverage they have agreed to.
Another type of fraud involves an insurance broker. A broker is someone who works with a potential client to find the best deal on insurance. Some unsavory brokers only work with insurance agents who commit insurance fraud.
This means that when the consumer contacts the broker, the broker has already decided who they will direct the business to.
The broker will feign having researched several companies and decided on a particular one being the best match for the client. Then the client will work with that insurance agency that is being represented by the dishonest agent.
In the end, the client will have an insurance policy that is well beyond anything they need and the agent and the broker work out a fee agreement to split the extra commissions.
The best defense against falling victim to insurance agent fraud is to fully understand the extent of the insurance coverage you need. When a person contracts an insurance broker or an insurance agent they should already have done their research into the specifics of the coverage they need.
They should also ask for a copy of the policy to review in detail before signing it. Some people actually fall prey to insurance agent fraud because they sign a policy that has not been fully completed.
The agent may reassure the client that they will take care of the extras after the signature has been secured. Never sign any insurance documents if they are not fully completed.
Richmond Insurance Fraud Scheme: Woman Faked Death
It may sound like something that belongs to the world of Hollywood big-screen blockbusters, but faking one’s death, or, for example, that of a spouse, child, or parent in order to fraudulently obtain life insurance or death benefits, is far more common than many may believe.
While it’s difficult to determine exactly how many people have defrauded insurance companies in this way, these companies—and state and federal officials—are nevertheless coming down hard on those suspected of the crime.
The Coalition Against Insurance Fraud, a partnership between insurance companies, advocacy groups, and federal agencies, acknowledges that these crimes, or attempted crimes, happen with enough frequency to warrant a constantly mobilized team of investigators, and the development of systematic (and confidential) guidelines by which these crimes are investigated; meaning that the fraud attorneys that defend these cases will have a more difficult time building a defense.
Insurance companies are aggressive when it comes to combatting fraud, and with good reason: millions of dollars are at stake. So, how are these investigations launched? Some insurance companies start to weed out possible risks at the very earliest of stages: at the point at which a potential client seeks out a price quote.
Those with criminal backgrounds may be looked at more closely, seen as greater risks. The man suddenly asking for a high-dollar amount policy (a million dollars, anyone?) for his wife may also trigger red flags. If, down the road, a life insurance claim seems “off,” an investigative team is alerted.
This is but a rough sketch of the insurance industry’s efforts to combat fraud, but, not surprisingly, insurance companies aren’t willing to share a great deal more information about their methods. To do so, they believe, would negatively impact their ability to go after those they believe have committed fraud, such as Vickie T. Armes of Richmond, VA.
Richmond, VA Insurance Crime
Armes, 57-years-old, recently pleaded guilty in a scheme to defraud the government of approximately $835,218 by falsely reporting her death, and that of her husband, in an attempt to claim benefits from Servicemembers’ Group Life Insurance. Armes had spent over three decades in the U.S. Air Force as a reservist but is now looking at over ten years in prison and a quarter-million dollar fine.
Armes forged a death certificate for her husband, also retired from the U.S. Air Force, about two years before she faked her own death and collected hundreds of thousands of dollars. Vickie is the only one who has been charged with this crime.
Investigating Fake Deaths
When it comes to tracking down a fraudster, today’s social media networks are front and center. Investigators look into everything from Facebook to Twitter accounts as an aid to determining whether or not a suspect claim is fraudulent.
Diligent insurance sleuths hit travel records, as do their passport and cell phone activity. Not to be forgotten, credit card usage can be and is often tracked.
In other words, those imagining a life on the lam in South America, Mexico, or remote African township are in for a surprise: Any activity indicating that a person reported as dead is indeed alive and well will often be unearthed.