What Is Insurance Fraud?

Insurance Fraud is a costly business for those who provide policies and cover.

Here in the United Kingdom, it is currently believed to cost insurers way in excess of one billion pounds a year.


Insurance fraud can cover many angles, from organised criminal activity to the average householder who artificially inflates their claims.

Such individuals may often see exaggerating their claims as being completely acceptable.

They may believe that, because they have been the victim of a crime or misfortune event, that they are entitled to a little compensation for the hassle.

Many householders are also known to bump up their claim values in order to recover their premiums, thinking that they have a right to do so.

Within the UK legal framework it is actually a very difficult task for any insurance company to dispute claims which they believe may be fraudulent.

Loss adjusters may investigate areas where they believe the claimant is exaggerating or mistaken, however, proving fraud (which is a difficult task in itself) still doesn’t automatically void either their claim or their policy.

There are also problems with more serious criminal fraud – as soon as one scam is detected and understood, another one materialises to replace it.

Often criminals are so well organised that it often takes direct police involvement and surveillance to identify who they are and what they are up to.

One example is car insurance related fraud.


One such example is where a gang would buy two vehicles.

One of them would be almost completely worthless whilst the other would be a high value, luxury car that they acquired very cheaply due to it being accident damaged and not repaired.

The two cars would then have a ‘collision’ with the already damaged luxury car getting hit where the pre-existing damage already was.

The criminals would then submit a fraudulent claim for this ‘accident’.

These “accidents” would, of course, take place in areas with plenty of “witnesses” (these people, naturally, would be in cahoots with the whole ruse).

How does an insurance company counter such a well thought out fraud?

That’s certainly not a simple matter.

Unless documentation or witnesses can be found to verify the car’s condition prior to the collision, then there isn’t much option but for the insurance company to pay out to the fraudsters.

About Lee Munson

Lee's non-technical background allows him to write about internet security in a clear way that is understandable to both IT professionals and people just like you who need simple answers to your security questions.


  1. […] Gardiner goes on to write about how a plan was concocted in order to collect insurance money on the heavily damaged […]

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