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Insurance fraud

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Insurance fraud occurs when an insured individual or entity exaggerates or falsifies an insurance claim in order to receive unjustified compensation for injuries or losses.[1]

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Fraud generally occurs when someone knowingly lies to obtain some benefit or advantage they are not entitled to or someone lies to obtain an entitlement belonging to another party. Depending on the nature of the fraud, such actions can result in civil litigation or both civil and criminal prosecution.[2] Some studies suggests that the annual value of insurance fraud approaches approximately $80 billion.[3]

Police and prosecutors distinguish between two types of insurance fraud: "hard fraud" or "soft fraud." Hard fraud occurs when criminals intentionally commit physical destruction of the property for the purpose of collecting on the insurance policy. Soft fraud occurs when a policy holder exaggerates a legitimate claim to collect a higher payment or when someone applies for an insurance policy but understates the circumstances to lower the policy premium.[4]


  1. http://criminal.findlaw.com/crimes/a-z/insurance_fraud.html
  2. http://www.insurance.ca.gov/0300-fraud/0100-fraud-division-overview/0100-what-is-insurance-fraud/
  3. http://topics.law.cornell.edu/wex/insurance_fraud
  4. http://topics.law.cornell.edu/wex/insurance_fraud

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