Insurance fraud occurs when a party in an insurance contract breaches their promise set forth. Insurance fraud is typically thought of as being done by the insured– the person who buys an insurance policy from an insurance company– but it can also be done by an insurance company. While an insured may submit a fraudulent or exaggerated claim, an insurance company may choose to do something in the vein of denying a benefit that is legitimate. Some types of inequity performed by insurance companies– or individuals employed by an insurance company– will be discussed in this article.
One common type of deception committed by principals of insurance companies is premium diversion. This usually consists of the agent taking money delivered for the purpose of a policy and allocating it for their own uses, rather than passing it on to the underwriter.
A variation of this offense is selling insurance without a license, and then refusing to pay claims despite premiums having been paid. Essentially, the insurance agent never was an insurance agent.
Replacing or Selling Policies When It Shouldn’t Be Done
The premise: you may already possess a policy that serves your needs well, but an insurance agent convinces you to replace that policy with a new policy. The new policy is not necessarily fraudulent– it is almost certainly “real”– but it may be a bad replacement for the policy your currently have.
Three terms in the insurance industry that describe variations of this activity are churning, sliding, and twisting. Churning is defined as excessive trading for the purposes of making a high commission; sliding involves selling a customer more than they believe they’re buying; and twisting is getting policyholders to change policies in later years so the agent can maximize commissions.
What You Can Do
If you feel you have been deceived by an insurance company, there are legal actions you can take. This can include anything mentioned in this article; it can also include if your doctor or a healthcare professional is overcharging you or your insurance company for services performed.
California, in particular, is designed to punish those who try to game the system. However, for a lawsuit to be successful, it has to be proven that any fraud was knowingly intentional, rather than just accidental.
The penalties for insurance fraud depend upon a number of variables, including the specific type and circumstances of the insurance fraud and the amount of money involved. Sometimes prison time is involved. If you have a good legal team representing you, your case has a much higher chance of garnering a successful outcome.
At Law Offices of Robert Yousefian, our criminal defense attorneys represent victims of insurance scams and fraud. Learn more about our Criminal Defense Services and setup a 1 hour Free Consultation with one of our attorneys today.
Note: Attorney advertising. Nothing posted on this blog is intended, nor should be construed, as legal advice. Blog postings and hosted comments are available for general educational purposes only and should not be used to assess a specific legal situation. Nor does any comment on a blog post create an attorney-client relationship. The presence of hyperlinks to other third-party websites does not imply that the firm endorses those websites, their contents, or the activities or views of their owners.