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Understanding insurance fraud

Insurance is a means of protecting yourself from financial loss. It is one of the best forms of risk management available against any uncertain loss. And, as always, when large sums of money are involved, there is a high chance of fraud. There are several scenarios that could be considered insurance fraud. The most common insurance fraud is false or exaggerated claims in order to seek compensation for damages that never occurred. There are even some times when insurance providers are the ones committing fraud. Selling of unlicensed insurance coverage or theft of insurance premiums by brokers is also insurance fraud.

People from different professions could be involved in illegal insurance claims. Anyone in a position of trust may try to benefit financially by making false or inflated claims. Detection of insurance fraud is difficult because perpetrators try their best to make it look like the damage was real. Insurance fraud causes millions of dollars in losses for insurance companies, thus increasing the costs for other customers. It may be dealt with through serious administrative action or criminal charges.

The two most common types of insurance fraud are hard and soft fraud. Hard fraud is the deliberate attempt to stage an incident that would be covered by the insurance policy. Soft fraud is more common and occurs when a policyholder tries to exaggerate in order to maximize the claim.

If you have been accused of insurance fraud, it is advisable to contact an experienced attorney as soon as possible. The attorney will assess your claim and devise a strong defense strategy for you.

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