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more_legal_areas consumer_fraudInsurance fraud is generally defined as an attempt to deceive an insurer to receive undue benefits. However, insurance fraud can also be committed by insurers to take advantage of unwitting policyholders. Insurance fraud by an insurance company, its employees, or a group acting as insurers is called "internal" insurance fraud.
The most blatant form of internal insurance fraud consists of setting up a fake insurance company using off shore accounts and falsified assets. Insurance fraud in this case consists of selling worthless insurance to customers and pocketing the payments. Another insurance fraud situation involves employees of a legitimate insurance agency stealing premium payments. The victims of this insurance fraud, the policyholders, are effectively without insurance, as payments were never officially received. Another insurance fraud risk involves illegitimate insurance companies issuing surety bonds to construction companies. This is a profitable insurance fraud, as construction companies must be bonded in order to get contracts; these insurance fraud victims usually pay much higher than average premiums, only to discover the insurance fraud after they file a major claim.
In addition to these scams, insurance fraud is often committed by legitimate insurers, health care providers and doctors. Legitimate insurers use insurance fraud to "roll over" elderly customers'' life insurance into expensive short-term policies that expire quickly. Insurance fraud by health care providers often means misdiagnoses or misreporting treatment to get Medicare money. Insurance fraud in these cases can put the health of the patient at risk. Another method of insurance fraud committed by some carriers is unduly denying claims on health and life insurance policies.
Insurance fraud is the second-costliest white-collar crime in America. According to the National Insurance Crime Bureau, insurance fraud costs Americans over $100 billion annually. (Hurricane Andrew cost only $17 billion.) Insurance fraud can cost individual victims hundreds of thousands of dollars, and even their health or lives. Insurance fraud is a serious offense: if you suspect that you are the victim of insurance fraud, contact an attorney immediately. An attorney who is familiar with insurance fraud can help you determine what your rights are under your policy. If insurance fraud has occurred, you have a variety of options to rectify the situation.
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