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Fake claims are related to insurance policies and arise when an insured person tries to benefit from an insurance policy in a fraudulent manner. Such fake claims may be exaggerated beyond the fact, or they may be fraudulent in their entirety. Usually, the policy holders see a valid insurance claim as an opportunity to make more money or to benefit in other material ways from the insurance company.
An example of a situation that may give rise to fake claims is when there is a minor natural disaster, such as a hurricane. A homeowner may see such an event as an opportunity to get an insurance company to fix a leaky roof, which may have been a preexisting condition that he or she failed to reveal to the insurance company prior to obtaining homeowner’s insurance. In such a situation, the insurance company may not have any way of knowing that the leakage in the roof was not the direct result of the hurricane. If the insurance company fixes the roof, then the homeowner has made a fake claim.
Instances of fake claims are numerous, and they are partly responsible for high insurance premiums. Insurance companies know that some fake claims will slip through despite their best efforts to halt such illegal activities, so they compensate by charging higher premiums. There is a cap, however, on the maximum rates they may charge their customers that is dictated by the provisions of the law regarding such matters.
Apart from fake claims by home owners, such fraudulent claims also apply to auto insurance. Some car drivers deliberately engage in tactics that may compromise their vehicles so that they can benefit from fake insurance claims. These tactics may be very subtle like stepping on the brake in such a manner that the person following the vehicle will hit it. The driver may then put the blame on the driver in the car behind, who may not realize that he or she has been manipulated. The driver who hit the vehicle may have no other choice than to contact his or her insurance company to fix the other driver’s vehicle, which may have had other faults that will be attributed to the collision.
In the same sense, fake health insurance claims also cost insurance companies. For instance, the same driver who manipulated the other driver into hitting his or her car may claim to have suffered whiplash as result of the collision. Such a claim may be fake, and the insurance company will be obliged to compensate the driver.