What types of insurance fraud are most commonly encountered?

Insurance fraud is a serious crime that costs insurance companies, their customers, and society as a whole billions of dollars every year. In California, the most common types of insurance fraud are hard fraud and soft fraud. Hard fraud occurs when someone deliberately stages an accident or files a false claim with the intent of defrauding an insurance provider. Examples of hard fraud include exaggerated injury claims, theft of property, staged accidents, and falsified documents. Soft fraud is deceiving an insurance provider about a legitimate claim. Examples of soft fraud include exaggerating an injury claim or not disclosing pre-existing medical conditions. Soft fraud is much more common than hard fraud and can be difficult to detect. Insurance fraud can also take the form of agent fraud. This occurs when an insurance agent or broker gives customers false information or advice in order to get them to purchase unnecessary or overpriced insurance policies. California has taken steps to combat insurance fraud by passing the Insurance Fraud Prevention Act in 2018. This act seeks to reduce fraud by increasing penalties for insurance fraud, creating a database of suspected fraudulent activity, and providing grants to law enforcement to investigate insurance fraud cases.

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What types of insurance fraud are most commonly encountered?

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