What Is Insurance Fraud? Definition

Why it matters

Examples include hiding health conditions on an application, faking a claim, or an agent forging a signature. Fraud is a crime in all states and can lead to denied claims, canceled policies, fines, and jail. Honest answers on an application protect the family at claim time. Agents who commit fraud can lose their license. Anyone who suspects fraud can report it to the state department of insurance.

Source: iii.org

Related terms

Misrepresentation: Misrepresentation is a false or misleading statement about a material fact, made by an applicant or by an agent. In insurance, it can affect coverage, claims, and the agent's license.
Contestability Period: The contestability period is the first two years after a policy starts, during which the carrier can review the application and deny a claim for a material misstatement. Many states set this limit.
Unfair Trade Practices: Unfair trade practices are insurance sales and claims actions that state law bans, such as misrepresenting policy terms, false advertising, and unfair discrimination. Most states base their laws on an NAIC model act.
E-Application (e-app): An e-application is a life insurance application completed and submitted electronically instead of on paper. Many carriers offer e-apps with built-in questions, checks, and electronic signatures.
State Insurance Code: A state insurance code is the set of laws that govern insurance in a state. It covers licensing, policy terms, advertising, claims handling, and consumer protection.

All 241 terms

Why it matters

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