Fraud: The Line Item Hiding in Everyone’s Premium

By The NMH Agency Team, Licensed Agent

Here’s a number worth sitting with: insurance fraud in America costs,
by the FBI’s and industry coalitions’ long-standing estimates, tens of
billions of dollars a year in non-health lines alone, and it lands,
eventually, in the only place it can: premiums. The commonly cited
figure runs to several hundred dollars per family per year. You pay a
fraud tax whether or not you’ve ever met a fraudster, and some of the
schemes are engineered to meet you, at your most rattled
moments. Consider this the field guide: what fraud does to your bill,
the scams aimed at ordinary households, and the line between hard
bargaining and the felony people talk themselves into.

The scams that come looking
for you

Staged accidents. The classic repertoire: the
swoop and squat (a car cuts in and brake-checks so you rear-end
it, with “injured” passengers pre-loaded), the wave-in that ends in a
collision the waver denies, the phantom sideswipe in a parking lot.
Defenses are unglamorous and effective: following distance, dashcams
(which have quietly become the best $80 in anti-fraud equipment a
household can own), photographing everything and everyone at any
accident, counting occupants aloud for your notes, and calling police
for anything with injuries claimed. Staged-accident crews select for
distracted, undocumented targets; be neither.

Storm-chasing contractors and fee-for-access
schemes. Covered at length in our claims articles, summarized
here because it’s the fraud most households actually encounter: the
post-storm door-knocker offering to “waive your deductible” (that’s
insurance fraud with you as co-signer: the inflated invoice that hides
your deductible is a false claim), the assignment-of-benefits pressure,
the unlicensed “public adjuster” collecting up front. Sign nothing on a
first visit; verify licenses; your deductible is real and everyone
offering to make it disappear is proposing you commit a crime
together.

Fake adjusters and phishing. After regional
disasters, con artists impersonate carrier adjusters and FEMA staff,
harvesting policy numbers, deposits, and identities. Real adjusters
carry verifiable credentials and never demand payment to process claims.
When in doubt, hang up and call your carrier’s published number, or
us.

Agent-level fraud, rare but real: premium theft
(payments pocketed, coverage never bound) and fake policies. The defense
is verification: policies you can pull up with the carrier directly,
payments to the carrier or a traceable agency account, and licensed
agents you can look up with the state (ours are, and you should check
anyone’s).

The line people talk
themselves across

Then there’s the soft fraud ordinary people commit while feeling like
sharp negotiators, and it deserves plain talk. Inflating a claim’s
inventory, backdating damage, the address fudged to a cheaper ZIP, the
teen driver left off the policy, the “it was stolen” on a car that was
sold: these are not gray areas to insurers or, ultimately, to
prosecutors; they’re the most-prosecuted category of insurance fraud
precisely because they’re common. The practical consequences before any
legal ones: voided claims, voided policies, and a market record that
follows you (our nonrenewal and scores articles explain how durable
those records are). The difference between advocacy and fraud is simple
and bright: document and argue for everything true; invent
nothing. Push hard on valuations, cite every coverage you
bought, appeal every lowball, and this whole library will help you do
it. Just do it with facts.

Why fighting it is
self-interest

Every dollar of fraud is priced into next year’s premiums,
neighborhood by neighborhood: fraud-heavy regions genuinely pay more,
which makes reporting it less civic virtue than group self-defense.
Every state runs a fraud bureau; the NICB (National Insurance Crime
Bureau) takes tips; carriers’ special investigation units follow up more
than people assume. If a contractor offers to eat your deductible, an
accident feels choreographed, or an adjuster’s phone number only rings
once, say something, to your carrier, to the state, or just to us, and
we’ll route it.

The honest households are the ones funding the whole system’s fraud
tax. The least they’re owed is knowing how the schemes work, and the
fastest way to shrink the tax is a customer base that’s hard to steal
from. Welcome to it.

Something about a claim, contractor, or “adjuster” smell wrong?
Call 800.388.6780 and run it past us before you sign or pay. Skepticism
is free; we keep it in stock.