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Released: September 05, 2008

Help Desk FAQ

What is insurance fraud?

Insurance fraud is any deliberate deception against or by an insurance company or agent for the purpose of illegal or unwarranted financial gain. It can occur during the buying, using, selling and/or underwriting of insurance. Insurance fraud includes the sale of insurance by unlicensed agents and companies; people who pretend to slip and fall so that they can sue a property owner; organized criminal gangs who stage fake car accidents; homeowners who exaggerate damage claims, drivers who lie about their driving records or residence to get better auto insurance rates, and doctors who inflate their bills or charge insurance companies for treatments they never performed.

Insurance companies pass most of their losses from fraud along to their customers in the form of increased rates. Therefore, all policyholders pay more because of losses to fraud. Insurance industry surveys have found that even some "honest" policyholders do not understand that lying about your driving history or where you live in order to get a better insurance rate is insurance fraud.

According to state insurance commissioners around the country, immigrants are increasingly the victims of insurance fraud. Newcomers often have limited English skills and have little or no understanding of insurance—a complex subject that many English speakers do not fully understand. Scam artists prefer to prey on unsophisticated consumers.