There are many types of insurance fraud, and it happens in all areas of insurance, from life insurance, health care insurance, automobile insurance, to property insurance. The severity of insurance fraud attempts, range from the simple amplification of a claim to deliberately causing accidents and injuries.

Insurance fraud adversely impacts the insurer and the insured. Insurers loose millions of dollars every year as a result of insurance fraud, since they account for a significant number of claims received annually. Honest people carrying insurance are affected because fraud either indirectly or directly leads to increased insurance cost. You could say that the cost of insurance fraud is built into policy holders’ premiums, as carriers raise rates to compensate for their losses.

Home owners Insurance is one type of insurance cover that has been significantly affected by insurance fraud. Dishonest home owners have staged fires and even paid burglars to commit a ‘fake’ robbery in their insured homes or apartments. Dishonest auto insurance policy holders have staged accidents or abandoned an unwanted car somewhere and then reported it stolen.

The rising number of insurance fraud cases in the United States has resulted in legislative attempts to address the phenomenon. These efforts include the passing of the Health Insurance Portability and Accountability Acts (HIPAA) and the formation of the National Insurance Crime Bureau (NICB), which gathers information on fraudulent activities using hotlines and other sources and refers appropriate cases for investigation and prosecution. In the United States today, insurance fraud is considered a ‘white collar crime,’ and as a felony which can carry a sentence of two to fifteen years in prison. In States that do not recognize insurance fraud as a felony it is classified as bribery, theft of forgery. These crimes carry sentences that can include imprisonment and/or financial penalties. Other sentences for insurance fraud may include probation, parole, restitution and community service.

A surprising percentage of people who own an automobile and maintain a car insurance policy don’t realize part of the premium they pay every month may in fact defray the cost of their medical bills if they or a member of their household is involved in an auto accident.

The Medical Payments or Personal Injury Protection portion of many Automobile Insurance policies pays medical expenses which are as a result of a traffic accident or incident. Another covered event would include and incident when you are not in a Vehicle, but are struck by one. If you are a pedestrian walking on a public or private street, sidewalk or parking lot and you are struck by a car, bus or motorcycle, you may also have coverage. In many cases an automobile insurance policy maintained in your household will pay your medical bills — even if you are not a driver on the auto policy. The same could be true if you are a passenger in an insured family car.

Uninsured Motorist and Underinsured Motorist Coverage on an Automobile Insurance Policy might also possibly be accessed to defray or help to defray the cost of your medical bills when the at-fault driver or owner of a car other than your own has no auto insurance coverage in place at the time of the accident or incident. In addition, benefits may be available if the driver or owner of the other car has coverage, but not enough to pay the medical or hospital bills generated as a result of injuries you sustained in an accident.

All auto policy forms vary from carrier to carrier and state to state. Call your agent or carrier for the rules and regulations governing your policy so you’ll know what your car insurance-related medical coverage is.