| On the surface, it may appear the insurance | | | | honest person decides to mislead an insurance |
| company is the victim of insurance fraud. Only the | | | | company to either reduce their premium costs or |
| insurance company is out money when insurance | | | | increase their claim settlement. A simple lie such as |
| fraud is committed, right? Wrong. The Coalition | | | | not disclosing a speeding ticket to reduce the cost of |
| Against Insurance Fraud estimates that the average | | | | insurance is considered soft fraud. The price of |
| American family pays nearly $950 annually in | | | | insurance is calculated based on the risk being insured. |
| increased premiums to cover the costs of insurance | | | | If the risk of someone being in an auto accident is |
| fraud. Also, the cost businesses pay for insurance is | | | | higher because of their driving record, they should |
| increased and that additional expense is passed onto | | | | pay the premium associated with their risk. |
| the consumer in the form of higher prices. Therefore, | | | | Another example of soft insurance fraud is |
| the cost of fraudulent claims is not left with the | | | | exaggerating a claim. For example, if someone |
| insurance company; it is passed onto the consumer in | | | | exaggerates the cost of a claim in hopes of making |
| higher premiums and in the price of consumer goods. | | | | money off of it, that is considered soft fraud. |
| So what exactly constitutes insurance fraud? Is it | | | | Insurance was designed to indemnify people. To |
| simply just the hardened criminal that is out plotting | | | | indemnify someone is to bring them back to where |
| elaborate schemes to bilk insurance companies out of | | | | they would have been had the claim not happened. |
| millions? Or can insurance fraud be committed by the | | | | Insurance policies are not designed to increase |
| average citizen just telling a little white lie to get a | | | | someone's wealth simply because they were involved |
| little more paid on their insurance claim than they | | | | in a loss. |
| actually deserve? The answer is both. | | | | Unfortunately, it is all too common for people to think |
| The hardened criminal example above would be | | | | soft insurance fraud is justified. Many people do so |
| considered hard fraud. Hard fraud is committed by an | | | | based on the assumption that the insurance company |
| individual or a group of individuals that deliberately set | | | | is just making millions in profit off of people, so it is |
| out to scheme money from an insurance company. | | | | justified in that they are just getting their "fair share". |
| The schemes can include staged auto accidents, filing | | | | But that logic is flawed. The cost of fraudulent claims |
| fraudulent medical bills, murder for insurance, and so | | | | isn't left with the insurance company - it is passed |
| on. These are blatant attempts by someone to | | | | back onto the consumer in the form of higher |
| deceive insurance companies out of money they are | | | | insurance premiums. Therefore, the real victim of |
| not entitled to. | | | | insurance fraud is the consumer. |
| On the other hand, soft fraud is when a normally | | | | |