Sunday, December 30, 2012

Top 10 Insurance Scams

 1. Auto Theft

Cars are stolen quite often and there are two main ways that the bad guys make a living with stolen cars.  The first involves “chop shops” where crooked mechanics disassemble cars and sell the parts off.  The second method involves the sale of the vehicle to overseas buyers with no paperwork.

2. Staged Auto Accidents

Quite often two or more people will conspire to stage an accident in order to collect on insurance claims for totaled vehicles.  If the value of the car is inflated, the perpetrators will scheme to collect and profit from the insurance payoff.  Claims for faked injuries from a staged accident are also common.

3. Pocketing Repair Costs

Often people will forego repair costs to their damaged car and pocket the cash, or spend it on something other than the actual repairs.  This can be done quite easily, especially in cases where a car is damaged but still drivable. 

4. Medical Insurance Claims

There are many reported cases of medical insurance fraud every year involving crooked health care providers.  In these cases, doctors and clinics bill insurance companies for procedures and/or medications that were never needed.  In the worst cases, procedures get billed to an insurance company that were never even completed.  In other cases, fake patient names are used to scam insurance companies.

5. Unnecessary Medical Treatments

You may already have been involved in a medical insurance scam without even realizing it.  If your doctor is prescribing treatments that are unnecessary and billing your health insurance company, this is a form of medical insurance fraud.  Beware of doctors who continually change the types of procedures, and be especially cautious if you are asked to undergo various unsuccessful treatments.

6. Arson Fires

Burning down a house to profit from an insurance policy is all too common.  Those who are deep in debt or who may be behind on their mortgage routinely seek to collect from an insurance policy, and the most lucrative way to do this is often from a total loss resulting from a fire.  Forensics in this area has become quite advanced, and most of these criminals are caught.  While the bad guys in these cases may go to jail, and won’t get any insurance money, most policies contain a section that requires the insurance company to pay off any mortgage, even if the policyholder intentionally set the fire.  This is a huge cost to the insurance industry.

7. Storm Damage Claims

A common type of insurance fraud involving homeowners insurance involves making new claims every year for the same damage.  The scam works like this; an insured may have a roof that leaked one year causing some water stains in the house.  They make a claim with the insurance company, and get paid for the roof damage and for the interior damage. They fix the roof so it does not leak any more, but never fix any interior damage, pocketing that cash.  The next year they switch insurance companies and make a claim for interior water damage, which is not new damage at all, but which is the same damage from the prior year. 

8. Theft Claims

One of the most common forms of homeowner’s insurance fraud involves theft of personal items.  People will submit a claim for a break-in and theft, and tell the insurance company lies about what was stolen.  In some cases, there may have been a few things taken, but the actual list of items submitted to the insurance company is a fake inventory created by the insured to inflate their claim.

9.  Life Insurance Fraud

While this is quite an elaborate scheme, it is not uncommon.  This involves a person who takes out a life insurance policy naming their cohort as a beneficiary.  The perpetrator then fakes his own death and hides for several months.  Once the beneficiary is able to collect the payout, they both disappear pocketing the cash.

10. Fake Injury Claims

People who intend to collect money for injuries can easily fake a fall down or auto accident.  While injuries often do occur, sometimes there is no physiological damage apparent.  While a doctor can diagnose physical trauma, they cannot diagnose pain.  If a patient tells them it hurts, the doctor must put that in a medical report even if they believe it to be untrue.  

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