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Insurance Fraud

Insurance fraud is a crime. And it costs all of us.

What is insurance fraud?

Any act committed with the intent of fraudulently receiving payment from an insurance company is considered insurance fraud. Misrepresentation of facts when applying for insurance is also considered insurance fraud.

Insurance fraud occurs with every type of insurance – including auto insurance, homeowners insurance, and renters insurance. And it’s more than just reporting something that did not occur -- it is exaggerating the consequences of what did, or even going so far as to stage an incident in order to collect payment illegally.

Auto insurance fraud

In the case of auto insurance fraud, staging an accident, an injury or exaggerating the financial consequences are all examples of the crime of insurance fraud. Misrepresentation of facts when applying for auto insurance is also considered auto insurance fraud.

Home insurance fraud

In the case of home insurance, fraud occurs when a burglary is staged, or if loss or damage to covered items is reported and that loss never occurred. It is an example of insurance fraud that occurs with homeowners insurance, renters insurance and condo insurance.

Hard insurance fraud and soft insurance fraud

The insurance industry has defined hard insurance fraud as those activities that involve planned or staged incidents of theft, accident, or injury in order to collect payment. Soft insurance fraud is considered exaggeration of otherwise legitimate claims for purposes of collecting a larger payment than otherwise due. It also includes misrepresenting information when obtaining your insurance policy in order to benefit from a lower premium. 

How does insurance fraud cost you money?

Filing fraudulent claims is a crime. And it costs you money. How?

The Insurance Information Institute estimates that insurance fraud accounts for 10%, or about $30 billion, of losses in the property and casualty insurance industries in the United States.1

In order to cover payout of these fraudulent claims, insurance premiums are increased. That hurts all of us.

The consequences of insurance fraud

Those who commit insurance fraud are guilty of a crime. They are subject to both state and federal prosecution, depending upon the circumstances.

How to report insurance fraud

For more on reporting insurance fraud, contact the National Insurance Crime Bureau ( or your local authorities.

1 Insurance Information Institute, February 2008.

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