When Virginia residents think about fraud, they may often consider credit cards and identity theft. However, people also commit fraud when they fabricate insurance claims. There are many ways someone might commit fraud through insurance and it is important for people to understand what this kind of white-collar crime consists of.
Insurance fraud can come in many forms. According to the Federal Bureau of Investigation, some people may commit this type of fraud after a natural disaster. People may file a claim with their insurance company but include false information so it sounds like their home incurred a significant amount of damage when this is not the case. Additionally, people may sell insurance but lack the proper license. In this situation, fraud occurs because the person selling the insurance typically does not pay out claims but keeps the premiums. Insurance fraud can happen with many different kinds of insurance, including homeowner's, workers' compensation and health insurance. In many situations, people might commit this type of fraud by stealing insurance premiums.
When people commit insurance fraud, it is usually considered either soft fraud or hard fraud. FindLaw says that soft fraud consists of small lies people make when they file an insurance claim. People might say their home incurred wind or flood damage when this did not happen, for example. They may also exaggerate the extent of an injury they received. If people commit hard fraud, this means they made up a claim to get money from the insurance company. People may fake damage to their home or say they incurred a wound when they are actually uninjured.
It may surprise some people to learn that people from all backgrounds might commit insurance fraud. An insurance agent, for example, may embezzle premiums, while a doctor may file a claim for procedures he or she never performed. Most of the time, people have to demonstrate that fraud occurred. This means that someone usually has to prove that people knew they provided incorrect information about an insurance claim to receive money.