Most people don’t think twice about insurance fraud.
Out of sight out of mind is the motto for most, but that’s not actually the case.
Most of us, myself included, would like to take the mindset that since I don’t commit fraud it’s not my problem.
…Unfortunately, insurance fraud is a serious problem that doesn’t only impact those who are victims of it – nor does it only affect the insurance company.
Insurance fraud is far from a victimless crime. It affects every driver, homeowner, and business owner by raising insurance rates for everyone
A few extra dollars squeezed out of an insurance company may not seem like it’s a big deal. Right?
Unfortunately, when those extra dollars are taken many times over and over and over again, the financial burden on insurance companies is exponential.
It’s estimated that the annual cost of insurance crimes are in the billions.
…and it’s not slowin’ down.
What’s this mean for us as a consumer, as a purchaser of insurance, as someone just trying to protect the things we’ve worked to build?
Think of it like a restaurant; if an ingredient’s price becomes inflated eventually a restaurant will have to adjust its prices for recipes that require that ingredient.
Why would they do this?
Restaurants are here to make money. It’s important to offset the cost of the ingredient and reach a middle ground where its fair for the buyers and still adds profit to the restaurant.
Fraud is similar for the insurance company
That means that the more fraud that occurs, the more everyone winds up paying for his or her insurance policies.
The cost to the insurance company is passed on to the insured, even though they likely had nothing to do with the crime.
Insurance fraud from inflated claims, false injury and property damage claims, and of course large insurance crime rings adds up quickly to an amount of money that insurance companies can’t simply absorb.
Instead, everyone pays the price.
So are you curious how much it’s costing you?
Insurance fraud is a big deal in our country. An average person will pay an extra $200-$300 a year in insurance premium to offset the cost of fraud.
That’s a lot!
Wondering why your rates are so high? Take it out on the guy down the street that reported a trailer stolen and it wasn’t…
Fraud can come in many forms.
It could be an injured employee that is collecting workers compensation without truly being injured. It might be as simple a roofer waiving your deductible when you get a new roof. (yes, that’s fraud!) Click Here to read how that instance is fraud.
The top five most common fraud claims are interesting though. Number one is reporting stolen vehicles not really missing. The 2nd most common is creating minor car accidents to get insurance money. The third is a staged house fire and the fourth is false work comp accidents. The last is false burglary, theft, or robbery of your house, car, or business.
Insurance fraud is not a small crime, nor it is victimless.
The common attitude that insurance companies can absorb the loss leads to large financial losses that affect everyone’s insurance rates. We all can help to keep insurance rates lower by avoiding fraudulent claims and reporting it when necessary.
Have questions regarding your insurance? ECI is always here.