Insurance fraud is said to occur when a policyholder lies to an insurer or intentionally misrepresents information for financial gain or some other benefits to which he/she is not otherwise entitled to. However, a policyholder may also become a victim of fraud when an insurance company denies benefits that are rightly entitled to a consumer/policyholder.

Types of insurance fraud

There are 2 types of insurance fraud, namely internal and external fraud, which are discussed below.

1. External fraud – This type of fraudulent acts are committed by the policyholders and/or professionals, who provide assistance to the consumers to commit such frauds. Usually, these professionals try to overstate the damage by making the loss appear more than what it actually is. The primary aim behind this is to claim relatively higher insurance payment, a portion of which is received by the professionals, who helps the policyholders to commit such fraud.

2. Internal fraud – Internal insurance frauds are committed by the insurance agents with primary intention to divert the premiums (paid by the policyholders) to the personal accounts of company employees. One of the most common internal frauds committed by the agents or other professionals is by issuing fake certificates, insurance policies or insurance identification cards.

Apart from above, insurance fraud can also be categorized into hard and soft frauds that are discussed below.

  • Hard fraud – The policyholders commit hard fraud when they purposely fake an injury, theft or accident in order to receive claim benefits illegally from an insurer.
  • Soft fraud – It happens when the policyholders hide information or deliberately lie to the insurance company for financial gain.

Every year, the insurance companies lose substantial amount due to fraudulent acts. So, a number of insurance companies (including Hurricane insurance) have been hiring professionals specializing in insurance fraud detection. As for example, there may be insurance investigators or claims adjusters, whose job is to investigate whether a claim is fake or real. However, laws pertaining to insurance fraud are not same throughout the country and may differ from one state to another. If you or your loved one is the victim of Hurricane insurance fraud in New Orleans, visit www.bloomlegal.com and contact the New Orleans Hurricane Law Firm Bloom Legal, LLC. Contact at 504.599.9997 for free consultation.