Insurance Fraud

Increases claim costs, which insurers reflect in higher premiums for honest policyholders — Fraudulent claims inflate the insurer's total claim costs, and those costs are factored into the rates charged to all policyholders. As a result, honest policyholders pay more because of the fraud of a few. Beyond premium impact, insurance fraud is a crime that can result in criminal prosecution, including perjury for signing false claim documents, and insurers maintain special investigation units to detect and deter it. Consumers can help by reporting suspected fraud to the insurer or the Department of Insurance.

National insurance concept

A fire deliberately set by the insured to collect the insurance proceeds — Insurance covers only fortuitous (accidental, chance) losses. An intentional loss — an insured deliberately setting fire to property to collect proceeds — lacks the element of chance and is excluded; it is also insurance fraud. Accidental events such as lightning, wind, and burglary are fortuitous and are exactly the losses insurance is designed to cover. The fortuity requirement keeps insurance from becoming a tool for gambling or deliberate loss-making.

National insurance concept