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The Effects Of Insurance Fraud. Along with the invention of insurance was also the invention of insurance fraud. There are many types of fraud, from life insurance fraud to auto fraud. If you have an insurance, then this article is advisable for you to read since it will give you some insights about the effects of fraud to your insurance. Probably the main reason why people would commit fraud is for their own benefit of gaining money. There are definitely a lot of policies which can be filed against those people who commit fraud, thus, it is very easy for these people who commit frauds to be exploited. The insurance policy is usually exploited by those people who are saying that they are claiming more loss than what they have gained, and also, they can inflate the value of the lost item. Insurance fraud comes in two classifications which are known to be soft fraud and hard 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. When an insure party is known to be a legitimate claim, then this type of fraud will occur. Soft fraud, for example, happens when an insured individual is involved in a car accident and claims that more damage was done to the vehicle than is true. Soft fraud can happen at the start of a new insurance policy, when an individual purchasing a policy misrepresents their actually situation in order to get a lower premium. This kind of fraud can also happen to those people who opt to buy a car, they would get a car insurance policy, however, they won’t tell the truth about the miles on the vehicle, in that way, they can gain a lower premium.
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A hard fraud can also happen if an individual planned to have a loss just to receive an insurance payout. 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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Auto insurance fraud is one of the most common types of fraud. During 1996, it was known that approximately 36 percent of auto insurance claims were victims of fraudulent actions. 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.