According to the Association of British Insurers, fraudulent insurance claims cost more than £2.1 billion each year. To the average consumer, this translates to an addition of £50, on top of their insurance policy premium. Thus, over several years, this figure can grow into the hundreds. Although we have covered some aspects of insurance fraud in previous posts, we will visit some other dimensions to insurance fraud that may have been missed.
What is insurance fraud?
Put simply, anything which attempts to cheat the insurance process is considered insurance. Similarly, for an insurer to knowingly deny a customer a benefit also constitutes insurance fraud. According to statistics on the UK, motor insurance fraud is the most common type of fraud and the mostly costly for consumers.
Common Types of Motor Insurance Fraud
- Failure to disclose or misrepresentation of information upon application for insurance
- Omission of past accident or insurance claim details
- Failure to report points on license
- Failure to mention car modifications
- One of the most common types of motor insurance fraud prevalent today
- Fronting is when the main driver of a vehicle is listed on the insurance policy as a named driver
- Usually a person at higher risk and with a higher insurance premium is fraudulently listed as a named driver in order to reduce the insurance premium
- Despite being a common practice, fronting constitutes insurance fraud and is illegal
- Since it is considered insurance fraud, fronting could render your insurance policy null and void
False or Exaggerated Claims
- This is the most common type of opportunistic insurance fraud
- It usually involves someone who has been involved in an accident and has decided to make a claim against their insurance policy
- In order to maximise the pay out from the insurer, the insurance fraudster may concoct or exaggerate claims of injury resulting from the accident