Causey: Be Alert for Warning Signs of Insurance Fraud

Getting an insurance payout by lying is insurance fraud.

So is inflating the value of a claim in order to collect more money from an insurer.

Insurance fraud is a felony. And because not knowing the law is no excuse, it is worth pointing out a few important facts about this crime.

A 2022 study for the Coalition Against Insurance Fraud estimated that this crime costs Americans $308.6 billion a year. That works out to roughly $3,800 annually for a family of four. Some estimates say about 20 cents of every premium dollar goes toward covering the cost of fraud.

Keep these points in mind about insurance fraud:

• Don’t overlook warning signs. If something about your insurance situation seems suspicious, stop and contact the Department of Insurance at 855-408-1212. Consumer specialists are available weekdays from 8 a.m. to 5 p.m. You can also reach us online at www.ncdoi.gov.

• If you notice fraud or think it may be happening, report it. You can do so anonymously by calling our Criminal Investigations Division at 919-807-6840 or toll free anywhere in North Carolina at 888-680-7684. Reports may also be submitted online at www.ncdoi.gov/fraud-control. In North Carolina, 50 special agents investigate insurance fraud, and special prosecutors help local district attorneys handle fraud cases.

• Insurance fraud is a crime that drives up costs for everyone. Businesses must factor fraud into their pricing, just as stores account for shoplifting and other theft. The price of fraud is ultimately passed on to consumers through higher premiums.

Insurance fraud is theft, and it can take many forms. Some schemes target consumers, while others are committed by consumers themselves.

Fake insurance companies or agents may cheat consumers by collecting premiums for bogus policies and never intending to pay claims. Examples include:

• Scammers may advertise fake policies at prices far below those of legitimate competitors.

• A company may sell a non-insurance product that is presented as insurance. For instance, an agent may market a health discount plan as “insurance” even though it is an unregulated, non-insurance product.

• A dishonest agent may take a consumer’s premium payment but never send it to the insurer. The customer believes the policy is paid for, but the insurance company has no record of payment and may cancel the policy or refuse to renew it.

Consumers can also commit fraud. Some common examples include:

• A driver may deliberately stage a car crash, claim injury and file an insurance claim.

• A consumer may overstate a legitimate loss in hopes of receiving a larger settlement than allowed.

• A consumer may falsify paperwork or submit false information on a claim.

• A driver may let a policy lapse, then have a crash, reinstate the policy afterward and claim the wreck happened after coverage was restored.

I hope these reminders help you avoid becoming a fraud victim. Working together, we can help fight insurance fraud and slow the rise in premiums.