Insurance companies suffer fraud at the best of times. Unfortunately for them it gets worse in a recession and even more so in a deep recession which is bad news for them but good news for the many Private Investigators who deal in this area of investigation. In fact insurance fraud is as diverse as the types of insurance policies that are available to the public and can really be classified in two ways, as either hard fraud or soft fraud. Soft fraud is far more common than hard fraud.

One of the most common forms of soft insurance fraud is in fact the exaggeration of injuries sustained in an accident. Someone who has suffered genuine injuries may exaggerate their extent, the effect on their ability to work and of course the length of time it takes them to recover. These exaggerations are often made with the sole intention of receiving a larger sum of money.

Hard fraud however, occurs when someone deliberately plans or invents a loss such as a collision, vehicle and equipment theft, and in fact in extreme cases, arson in order to receive a payment for damages. An art collector for instance, who insures a high value piece and then says that it has been ‘stolen’, claiming the money for themselves and keeping the art piece in the process. Criminal gangs are often involved in hard fraud schemes, many involving cars that are in fact stolen to order. Even life insurance is not exempt from fraud (read ‘A fraudulent insurance claim’ in our blog). This demonstrates the extent of deception that some people will use to defraud insurance companies.