Fraud: What it's costing you, how to protect yourself

Thursday, May 28, 2015

NEW YORK -- Watch out: Insurance crooks pick your pocket to line theirs. It's happening every day and it's already costing you money - find out more here, and you can make a difference!

Fraud: Why Should I Worry?

Insurance crooks commit one of America's most costly crimes. Insurance happens in every state, every day. People of all races, incomes and ages are victimized to the cost of at least $80 billion a year, the Coalition Against Insurance Fraud estimates.

What is Fraud?

Insurance fraud happens when someone cheats an insurance company for money they're not entitled to. Insurers and agents can also defraud consumers, or each other.

Hard Fraud: Someone deliberately fakes an accident, injury, theft, arson or other loss to collect money illegally from insurance companies. Crooks often act alone, burning down their home, perhaps, for cash or staging a fake accident. Increasingly, organized crime rings stage large schemes along these lines and steal millions of dollars.

Soft Fraud: Normally honest people often tell "little white lies" to their insurance company. Examples: A car owner lies about where their car is registered to save money, or inflates a fender bender claim to cover her deductible; a homeowner inflates the value of his stereo equipment stolen during a robbery; a printing business lists fewer employees than it really has in order to pay lower workers compensation premiums.

What Does Fraud Cost Me?

We have enough evidence to know that fraud is widespread - and expensive.

  • Healthcare fraud alone costs Americans $54 billion a year, the Coalition Against Insurance Fraud estimates.
  • More than one third of people hurt in auto accidents exaggerate their injuries. This adds $13-$18 billion to America's annual insurance bill according to the Rand Institute for Civil Justice.
  • Nearly a third of doctors exaggerate a patient's illness to help the patient avoid early discharge from a hospital, according to the Journal of the American Medical Association.

We All Pay the Price

Honest, hard-working consumers and businesses are the ones paying a steep price. Lives, businesses, careers and families are damaged or even ruined by insurance fraud crimes.

People lose their savings, some their entire life savings to insurance investment schemes - and the elderly are especially vulnerable. Think you are immune? We all pay in the form of higher auto and homeowner insurance prices when the large costs of insurance fraud are passed on to policyholders. Consumer goods cost more because of fraud, and so prices of at your department or grocery store rise due to fraud. And fraud can be very violent: People die from insurance schemes such as staged auto accidents and arson - including children and entire families. People and animals are murdered for insurance money.

Victims feel violated. People feel shame, despair and a sense of violation that can last a lifetime.

Protect Yourself: Stay Alert

You can protect yourself against insurance scams: Stay alert, ask questions, and go slow or back out if an insurance transaction seems suspicious.

  • Never sign blank insurance claim forms.
  • Demand detailed bills for repair and medical services. Check closely for accuracy.
  • Make sure "free services" aren't actually hidden in your insurance bill.
  • Be wary of buying insurance from door-to-door or telephone sales people.
  • Be suspicious if the price of insurance seems too low to be true.
  • Contact the Department of Financial Services, Consumer Assistance Unit, One Commerce Plaza, Albany, NY 12257, (800) 342-3736 to make sure the agent and company are licensed.
  • Keep your insurance identification number secret; insurance crooks can steal it and involve you in scams.
  • Be wary if a car suddenly pulls in front of you, forcing you to follow dangerously close. You may be set up for a staged accident.
  • After an auto accident, be careful of strangers who offer you quick cash or urge you to see a specific medical clinic, doctor or attorney. They could be part of a fraud ring.

To report fraud, or if you think you're being scammed, or someone asks you to take part in a fraud, contact the New York State Department of Financial Services, Insurance Frauds Bureau, One State Street, New York, NY 10004-1511, 1-888-FRAUDNY or the National Insurance Crime Bureau (1-800-835-6422).