Car insurance fraud is defined as the act of intentionally deceiving an insurance company in order to obtain money to which there is no legal claim. Fraud also includes exaggerating a claim to get an increased settlement. There are a number of ways people go about committing insurance fraud. Staged accidents or car theft, making knowingly false insurance claims and faking injury are just a few examples of insurance fraud.
Two classifications exist for insurance fraud: hard fraud and soft fraud. Hard fraud occurs when a person deliberately stages an accident such as a collision, theft or fire knowing that their insurance covers such a loss. Soft fraud happens when people exaggerate the loss or injury that actually took place after an accident. Both are forms of car insurance fraud, but whereas hard fraud is often run by criminal enterprises, soft fraud is most likely to be perpetrated by average insurance holders.
There are many ways that hard fraud can be committed. Fraud hit and run schemes occur when the victim and the perpetrator are in collaboration. Arranging for a car to be stolen, burned or otherwise vandalized to cash in on a premium are other possibilities.
After an accident, soft fraud occurs when the insured exaggerates the extent of their personal injury or vehicle damage. Withholding pertinent information when purchasing a new premium, in order to get lower rates, is another example of soft fraud.
Car insurance fraud is big business for criminal sorts, but even law-abiding consumers partake in it if they attempt to increase a settlement by faking injury or exaggerating the damage to their vehicle.