What is insurance fraud?


Quick Answer

Insurance fraud refers to any situation in which a person falsely tries to claim insurance money when that person isn't entitled to it. Insurance fraud is a crime, and it is normally categorized as either soft fraud or hard fraud.

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Full Answer

Soft fraud includes lying on an application or engaging in other forms of deceit to cheat insurance companies. Hard fraud involves more extreme cases when people fake covered events or claims to collect payments. Faking an injury to get an accident insurance settlement is one example. Burning down a house to collect homeowners insurance money is another example. Insurance fraud expenses contribute to higher premiums for law-abiding people.

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