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What is Fraud?

Insurance fraud is any act committed with the intent to deceive an insurer for the purpose of profit or gain. Insurance fraud may involve making false representations on an insurance application, exaggerating or inflating an insurance claim, and billing for services never rendered.

Some of the most common types of insurance fraud are:

Staged accidents

Some people actually cause collisions to collect insurance payments for injuries that are either nonexistent or greatly exaggerated. In one form of a staged accident, the car in front of you stops suddenly so you can't avoid a collision. Another version of a staged accident occurs when merging into traffic or pulling out of a parking space. The person committing the fraudulent act indicates it's safe for you to proceed. He or she then intentionally smashes into your vehicle, and later claims to be injured and denies it was ever safe for you to proceed. Staged auto accidents are often caused by organized fraud rings that include an attorney and a medical care provider.


Small businesses and fast food restaurants are often targets of this form of fraud, in which a person pretends to slip and fall to the floor, often in a washroom or kitchen, usually with no witnesses present. Injuries may be exaggerated or nonexistent.

Workers compensation fraud

Some employees falsely claim to be injured on the job when, in fact, the injury occurred outside the workplace. At other times, a real injury is exaggerated, and the dishonest employee receives benefits while sometimes working a second job. According to the National Insurance Crime Bureau (NICB), workers compensation fraud costs Americans $5 billion a year.

Medical fraud

This is the largest single fraud activity in the United States, costing a whopping $95 billion a year in losses, according to the NICB. Some medical providers may bill an insurance company for treatments not performed, or misrepresent the true cost of such services.

Insurance fraud, like all other types of fraud, is illegal in all states. It is a serious crime with serious consequences. Be on the look out for red flags. If something doesn't seem right, it probably isn't. Don't risk your job, your life, or your family's well being by committing insurance fraud. It just isn't worth it.