Often people do not realize the full extent of what is actually considered insurance fraud – immediately people envision elaborately planned schemes and major crime rings. However, a purposely omitted detail or a slight exaggeration of the truth, while seemingly minor, is also considered fraudulent and may have some very serious repercussions.
Although there are many different types of fraud, here are some of the most common examples:
- Lying about the way a loss occurred.
- Adding additional items or inflating the value of items in a claim.
- Filing previously existing damage under a current insurance claim.
- Withholding relevant, historic information such as past claims, convictions or policy cancellations.
In the event that someone is caught committing or even attempting to commit insurance fraud the consequences can be severe. Penalties for fraud can include the following:
- Your claim may be denied.
- Your insurer may cancel your policy outright.
- You may pay higher premiums in the future.
- You may be denied insurance in the future.
- Most importantly, as this is a punishable offense, people may face conviction and imprisonment.
- In cases involving amounts under $5000, you may be sentenced to a maximum of 2 years of imprisonment.
- In cases involving amounts over $5000, you may face up to 10 years of imprisonment.
Understanding the definitions and consequences, most people will avoid committing insurance fraud, but many do not understand how it can still impact them.
Why should you, a law-abiding citizen, be concerned about insurance fraud?
The reality is that insurance fraud not only affects the insurance industry, it also has an immediate impact on all policyholders. According to the Insurance Bureau of Canada at least 15% of every dollar paid in premium is used to cover fraudulent insurance claims. On a larger scale, this means that fraudulent crimes are costing Canadians over $3 billion dollars each year.
Although insurance companies are constantly working on developing new tools to investigate and determine fraud, your efforts can also help make a difference. If you know someone who is committing insurance fraud, you can report it by calling Crime Stoppers at 1-800-222-TIPS.
Together, with the help of the government, insurance providers and people like you, we can work towards eliminating insurance fraud and you can have peace of mind knowing that your premium contributions are only going towards genuine, lawful claims.
If you have any further questions or concerns about insurance fraud and how it impacts you, please contact your BrokerLink broker today.