One of the most common types and largest segment of financial fraud is insurance fraud. Insurance fraud covers a whole spectrum of abusers, from low income to the wealthy. The victims are often other insurance holders, as insurance companies pay-out bogus claims and thus premiums for others go up – the bottom line is that honest policy holders are subsidizing dishonest ones. In fact, insurance fraud in the United States costs consumers, the federal and state governments an estimated $80 billion a year or a staggering $950 per family, driving up insurance costs for everyone.

Many people do not realize that insurance fraud is a serious crime and can be punishable by jail time. However, this does not seem to deter people to commit insurance fraud, which in many cases can be done rather easily. The most simple form of insurance fraud involves bogus claims. For example, something as simple as filing multiple claims for the same injury. Bogus claims of a fake a car accident or arson simply inflate a claim. In the most severe cases, these types of insurance frauds can lead to death – trying to stage a car accident or arson.

Other frauds include the selling of insurance coverage. This can include excessive coverage, non-existent coverage or simple swindles. Many people are perplexed or simply lack the understanding of the product they are purchasing and are easy prey for fraudsters.

If you feel you have been sold an insurance policy that is either bogus, or overvalued you may have a fraud cause against the agent or company that the seller was representing. Complaints against insurance companies for failing to acknowledge a claim due to fine print or ‘breach of contract’ are numerous and often arise through misrepresentation of the agent.

It is in the interests of insurance companies to avoid paying out claims that may have been in breach of the contract or procedure, even if the policy holder is acting in their best faith. Big company’s with financial muscle employ whole teams of legal experts to examine each claim and repudiate the claim where possible. This situation has arisen largely due to insurance fraud among the public.

When there is an agent or broker involved, it becomes easier for either of these two parties to pass-on responsibility. A good broker will usually advise their client on how to avoid these situations by facilitating the claim process properly, and correctly advising them before a claim situation arises. However, there are many freelance agents or small brokers who are unreliable and only interested in selling you a cheap and useless policy, in which case you’ll probably be more successful and more rightful bringing action against them. Bringing action against the insurance company can be a costly affair and you have no option to join a tort case, unless there is evidence that the company has been consistently acting in bad faith with a large number of claims.