Orlando Harmon
Insurance fraud is a crime that costs the average US family between $400 and $700 per year in the form of increased premiums. It occurs when someone knowingly lies to obtain a benefit or advantage to which they are not otherwise entitled, or when someone knowingly denies a benefit that is due and to which someone is entitled. To avoid committing insurance fraud, it is important to be aware of the different types of fraud that can occur. For example, false or inflated claims, billing for services not provided, providing and billing for unnecessary services, and unlicensed and/or unauthorized activity. It is also important to be vigilant and take steps to protect yourself from becoming a victim of insurance fraud. Request detailed bills for repair and medical services and verify their accuracy, be suspicious if the price seems too low, and keep your insurance information safe.
What You'll Learn
Request detailed bills and verify their accuracy
Requesting and verifying detailed bills is an important step in preventing insurance fraud. After receiving any form of medical or dental treatment covered by an insurance provider, you should request and carefully examine detailed bills for repair and medical services. This is known as an "Explanation of Benefits" statement, which lists the services for which benefits have been paid. It is crucial to review this statement to ensure you have not been billed for services that were not rendered or for dates when you did not receive treatment.
For example, a common form of insurance fraud is billing for a more expensive procedure than what was provided, known as "upcoding." By comparing the services listed on the bill with the actual treatments received, you can identify any discrepancies and potentially fraudulent charges. This verification process helps protect you from being charged for unnecessary or inflated services.
Additionally, be cautious of providers who bill for services not provided at all. This could be an indication of fraud, as some providers may attempt to bill the insurer for services that never occurred. By reviewing the detailed bills, you can identify any such discrepancies and take appropriate action.
To further safeguard yourself, it is advisable to maintain detailed records of your own. Keep track of the treatments or services received, the dates of those services, and any associated costs. By cross-referencing this information with the bills you receive, you can more easily identify any inaccuracies or fraudulent activities.
Remember, insurance fraud is a crime that can have significant financial implications for consumers. By actively requesting and verifying detailed bills, you play a crucial role in preventing fraud and protecting yourself from becoming a victim. This proactive approach helps ensure that you are only paying for the services you have rightfully received and that your insurance coverage is being utilized honestly and appropriately.
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Verify the agent and company are licensed
It is important to verify that your insurance agent and company are licensed to avoid becoming a victim of insurance fraud. Dealing with unlicensed agents and companies can leave you without coverage when you need it most. Here are some ways to verify that your agent and company are licensed:
Check with your State Insurance Department
Contact your state insurance department to verify that your insurance company is legitimate and authorized to sell insurance in your state. In Texas, for example, you can use the Texas Department of Insurance Company Lookup or call them at 1-800-252-3439. Similarly, Florida residents can use the Office of Insurance Regulation Active Company Search at www.FLOIR.com/CompanySearch to verify a company license and the Florida Department of Financial Services Division of Insurance Agent and Agency Services at www.MyFloridaCFO.com/Division/Agents 850.413.3137 to verify an agent license.
Ask for Proof of License
Licensed agents and brokers are required to maintain proof of their license. Don't hesitate to ask your agent or broker to see their license to ensure they are authorized to sell insurance in your state.
Be Wary of Unlicensed Sellers
Be cautious if you are approached by someone claiming to be an insurance agent but is not listed as a licensed agent or agency. In Texas, for example, it is illegal to sell insurance without a license, except for surplus lines carriers, which must still be licensed in their home state or country and registered with TDI. If you encounter an unlicensed agent or agency, report them to the appropriate authorities, such as the Texas Department of Insurance.
Verify Identity Before Making Payments
Always verify the identity of your insurance company or agent before making any payments or providing personal information. Be cautious of unsolicited calls or requests for personal information, as scammers may pose as insurance agents to obtain your private information.
Review Documents Carefully
Before signing any insurance documents, review them thoroughly to ensure you understand the terms and conditions of your policy. Be cautious of high-pressure sales tactics and don't allow yourself to be rushed into making a decision. A legitimate insurance company or agent should give you the time and space to make an informed choice.
Remember, by taking these steps to verify the license status of your insurance agent and company, you can help protect yourself from insurance fraud and ensure that you have the coverage you need when the unexpected occurs.
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Don't sign blank insurance forms
Signing blank insurance forms is a risky practice that could potentially result in insurance fraud. While there may be no specific laws prohibiting the signing of blank or incomplete insurance forms, it is a practice that goes against the intent and purpose of safeguarding against dishonest or fraudulent information.
When signing a blank insurance form, you are attesting to the truth and accuracy of the contents of the form, often under penalties of perjury. This means that if incorrect or fraudulent information is added to the form later, you could still be held responsible. In some cases, this could result in the revocation of the offending agent's license.
To avoid any potential issues, it is best to refrain from signing blank insurance forms. Instead, ensure that all details are inserted into the form, and review the information carefully before adding your signature. This simple precaution can help protect you from becoming a victim of insurance fraud.
Additionally, when dealing with financial service providers (FSPs), it is important to be aware of your rights and the potential consequences. In some cases, FSPs may ask their clients to sign blank forms, claiming that it will save time or facilitate transactions while the client is abroad. However, this practice is prohibited by the FAIS Act and the General Code of Conduct. If you encounter such a situation, you can report it to the appropriate authorities, as non-compliance with the FAIS Act can result in steep penalties for the FSP, including fines, imprisonment, and license revocation.
Be suspicious of deals that seem too good to be true
When it comes to insurance, it's important to be vigilant and cautious to avoid falling victim to fraud. One common type of insurance fraud is the offering of deals that seem too good to be true. It's essential to approach such deals with caution and to be aware of the tactics used by fraudsters.
One such tactic is "ghost broking", where con artists pose as genuine insurance brokers and offer unrealistically cheap policies. These fraudsters often target young and vulnerable drivers who struggle to find affordable insurance. They may use online adverts and social media channels to reach potential victims. While they promise substantial savings, they provide fake or doctored policy documents that are worthless, leaving their victims without valid insurance. This not only results in financial loss but also puts people at risk of legal consequences for driving without insurance.
To protect yourself from such scams, it's crucial to verify the legitimacy of any insurance broker. Check if they are registered with relevant organizations, such as the British Insurance Brokers' Association (BIBA) or the Motor Insurers' Bureau (MIB). Ensure they have a legitimate website, a UK phone number, and a physical address. Be cautious if the price seems too good to be true, as it probably is.
Another variation of this scam involves unlicensed companies selling fraudulent insurance policies, particularly to consumers and small businesses who have difficulty finding affordable insurance. These companies collect premiums but may disappear when it's time to pay out claims, leaving their customers without coverage and facing expensive bills. To avoid this, always verify the license status of the agent or company before purchasing insurance.
In addition, be wary of unsolicited offers or high-pressure sales tactics. Take your time to make informed decisions and don't be pressured into buying coverage that seems too good to be true. Remember, it's better to be cautious and thorough than to fall victim to insurance fraud.
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Report suspected fraud
If you suspect insurance fraud has been committed, you can report it in several ways, depending on your location. Here are some general guidelines and resources to help you report suspected insurance fraud:
United States:
The Federal Bureau of Investigation (FBI) encourages individuals to report insurance fraud to their local FBI offices. You can also check if your state sponsors a fraud bureau that investigates insurance fraud, as most states do. Additionally, you can go directly to the insurer you believe is being defrauded, as some companies have systems in place for reporting fraud.
California:
The California Department of Insurance has developed a method for the general public, as well as licensed California agents and brokers, to report suspected insurance fraud. You can submit a report through the Consumer Insurance Fraud Reporting Form and mail it to the California Department of Insurance Enforcement Branch Headquarters or contact their Investigation Division or Fraud Division, depending on the nature of the fraud.
Texas:
Texas law requires that suspected insurance fraud be reported within 30 days. You can report it to the TDI Fraud Unit online or by calling their Help Line at 800-252-3439. Fraud involving Medicare, Medicaid, or drug or health care discount programs should be reported to the Texas Attorney General's Consumer Protection Hotline at 800-621-0508.
New York:
Suspected insurance fraud can be reported to the New York State Department of Financial Services (DFS) through their Insurance Fraud Hotline at (888) 372-8369, or by submitting the Report Insurance Fraud form online or by mail.
Remember, it is important to act promptly when reporting suspected insurance fraud and provide as much detailed information as possible. Your report can help protect others from becoming victims of fraud and contribute to holding those responsible accountable.
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Frequently asked questions
Insurance fraud occurs when someone knowingly lies to obtain a benefit or advantage that they are not entitled to, or when someone knowingly denies a benefit that is due to someone else.
There are several common-sense steps you can take to prevent insurance fraud. These include:
- Requesting detailed bills for repairs and medical services and reviewing them for accuracy.
- Verifying that the agent and company are licensed.
- Keeping insurance information in a safe place.
- Reporting suspected fraud to an authority.
Examples of insurance fraud include:
- False or inflated theft repair claims.
- False or inflated property damage claims.
- Billing for services not provided.
- Providing and billing for unnecessary services.
If you suspect insurance fraud, you should report it to the relevant authorities. In the US, you can contact your local FBI office or the National Insurance Crime Bureau (NICB). You may also be eligible for a reward if you report a scam.
