What It Looks Like When Insurance Companies Commit Fraud

Insurance companies rely on paying out as little as possible for customer claims to increase profit margins. Unfortunately, this can lead to some salty business practices and even fraud. 

If your insurance company denies your claim, be sure that it is for a legitimate reason. If it is not for a legitimate reason, your insurance company could be committing fraud. 

Appropriate reasons for claim denial

According to FindLaw, there are plenty of valid reasons an insurance company may deny your claim. If your coverage is not sufficient, for example, your insurance company has the right to deny your claim. Additionally, the company may reference application or claim errors as a reason for denial. If the company suspects a fraudulent claim not only will the claim receive a denial, but you can also face criminal charges. 

In order to avoid denial for one of the above-mentioned reasons, it is important to file your claim in a timely manner and ensure that there are no errors on the forms. 

Inappropriate reasons for claim denial

Conversely, insurance companies that deny legitimate claims or engage in the following practices may be committing insurance fraud

  • Delaying or inadequately performing an investigation to avoid payment on a claim 
  • Refusing to give a claim decision within a sensible time frame 
  • Failing to provide a sufficient reason for denial of a claim 
  • Failing to utilize the period of contestability appropriately 

If your insurance company is refusing to cover a legitimate claim for which you were appropriately insured, it may be a good idea to reach out to someone who can advise you on your next steps. 

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