Some Michigan residents and businesses commit insurance fraud to benefit themselves on a financial level. Insurance fraud is considered an illegal act that can be done by either the buyer or the seller of an insurance contract. You may want to understand more about what constitutes such an offense.
What is insurance fraud?
Insurance fraud is a white-collar offense that entails specific behavior on the part of either the seller of an insurance policy or the buyer of it. In the event of insurance fraud on the part of the seller, there are a few different ways that they can commit fraud. Some of these include selling policies for non-existent companies, not submitting the premium money and even churning policies to enhance their commission.
When it comes to insurance fraud on the buyer’s end of things, there are various instances that constitute fraud. These include exaggerating claims, post-dating policies, faking a death, faking a kidnapping or even falsifying medical history. Any of these activities that misuse an insurance policy to illegally gain something could be considered insurance fraud.
A look at a couple of different fraud schemes
There are two main types of insurance fraud that sellers commit. The first is referred to as premium diversion. This happens when an individual or a business sells insurance without having a license and then does not pay out on a claim to the policyholder. The second common fraud scheme is referred to as churning. Under this type of fraud scheme, intermediaries known as reinsurers take a commission to dilute the premium that the policyholder pays. This way, there’s no money left to pay for claims.
Whether these offenses surround car insurance, life insurance or another type, a charge of insurance fraud can have serious consequences. Someone accused of this white-collar crime may want to consult a defense attorney.