Cunninghams Solicitors

Different types of insurance fraud and what to do if you’re accused

What is insurance fraud?

Insurance fraud is when someone provides false or incomplete information to an insurance company with the intention of benefiting in some way. This can involve creating illegitimate insurance policies or making false claims against an existing policy.

Some examples of insurance fraud include:

• exaggerating the extent of losses to obtain more money,
• making fake claims to receive insurance pay-outs,
• staging crimes such as burglaries,
• deliberately damaging possessions to receive insurance pay-outs,
• providing inaccurate information to get a better insurance premium,
• providing incomplete information to claim a larger pay-out
• failing to report changes in circumstances that would impact the cost or validity of insurance.

While insurance fraud may begin as a small misrepresentation, any attempt to defraud an insurer is considered a criminal offence and is taken seriously by insurance companies and the police. If you have been accused of insurance fraud you need to contact a fraud solicitor without delay.

What are the different types of Insurance fraud?

Ghost Brokers

Individuals known as ghost brokers impersonate legitimate insurance brokers and deceive unsuspecting victims into purchasing invalid or fake insurance policies. These fraudulent policies usually fall into two categories: real insurance policies obtained using false information and then altered and sold to others or entirely fabricated insurance policies that appear legitimate to deceive buyers.

In either case, the policies are not legally valid, leaving policyholders vulnerable to the risks associated with being uninsured.

Employer’s Liability Insurance fraud

Commercial liability fraud involves fraudulent claims made on an employer’s liability insurance, which is mandatory for almost all workplaces in the UK. Employers are required by law to have a minimum of £5 million in coverage (although most insurers provide coverage up to £10 million), which may cover personal injury, illness, and even death. In some cases, employers may be held indirectly liable. Fraudulent claims may arise from a failure to perform appropriate health and safety risk assessments, slips and trips, or even wrongful disclosure of employees’ data.

Property Insurance fraud

Arson

Under property insurance fraud, arson fraud is a common type where property owners deliberately set their premises on fire to make an insurance claim. However, with technological advancements, investigators can now determine if the fire was started intentionally and even if certain items were present during the incident.

Burglary

Burglary fraud involves staging a burglary or falsely claiming for an item that was not owned. Property owners may falsely report a burglary that never occurred or use an actual burglary to make a fraudulent claim.

Water

Staged water damage or mould is a lesser-known type of insurance fraud in the UK. Property owners intentionally create or exacerbate water damage or indoor mould to make an insurance claim. This can involve limiting ventilation, heating, or spraying water around the walls or ceilings. Proving this in court can be difficult, but investigators will look for damage in unlikely areas or patterns.

Motor Insurance Fraud

Motor insurance fraud can take different forms, with vehicle theft and car accidents being the most common. In the case of vehicle theft, fraudsters may enlist the help of a friend to steal their car or sell it for scrap before reporting it as stolen to their insurer. However, claiming against motor insurance for vehicle theft can be challenging. Some policies have specific exclusion clauses, such as if the owner did not take enough measures to prevent theft or if the theft was carried out by a relative or someone in the same household.

Regarding false insurance claims related to car accidents, there are three main categories: staged, induced, or ghost claims. These types of fraud involve making false or exaggerated claims, such as inventing injuries from a real accident or staging an accident entirely, as in the case of ‘crash for cash’ schemes.

What happens during an insurance fraud investigation?

If there is any suspicion that you are committing insurance fraud, an insurance company will initiate an internal investigation. Insurers are vigilant about detecting inaccurate or potentially fraudulent claims, and you could become the focus of an investigation even if you have been entirely truthful. Contact an insurance fraud solicitor as soon as you are contacted about a potential fraud investigation.

During the investigation, the insurer will ask you questions and may also contact your friends and family for statements. The investigation can be very thorough, and a special investigator may be employed to gather evidence against you, including audio recordings, expert reports, and photographic evidence, insurance fraud solicitors will be able to best advise and guide you through the process.

If the insurer concludes that you have participated in insurance fraud, your case will be referred to the police, likely via the Insurance Fraud Bureau. The Insurance Fraud Enforcement Department (IFED), a specialised police unit, will handle your case.

What happens during a police investigation for insurance fraud?

During a police investigation for insurance fraud, the IFED will launch their inquiry, likely involving an interview with you. However, it is essential not to answer any police questions or participate in an interview without a solicitor present. You are entitled to free legal advice at the police station and have the right to remain silent until your representative arrives. We strongly suggest contacting a fraud solicitor at this point.

The police may request a search warrant from the court if they believe it is necessary. If granted, they can search your home and workplace and seize items such as laptops, desktops, mobile phones, and accounts. The police can also examine your communications, including emails and WhatsApp messages.

If sufficient evidence indicates your guilt in the insurance fraud case, you will be formally charged, and you must decide whether to plead guilty or not.

What should I do if I’ve been falsely accused of insurance fraud?

The insurance industry reportedly loses over £1 billion every year due to fraudulent claims, prompting insurers to take a proactive stance against the problem. Unfortunately, this sometimes leads to innocent individuals being wrongly investigated or accused of insurance fraud, even if they made an honest mistake or have done nothing wrong.

If you are in this situation, it’s natural to feel upset and frustrated. You may be obtaining an insurance policy or seeking compensation for incurred losses. Still, the insurer’s allegations of fraud can result in a denied claim and possible involvement of law enforcement. This can be a daunting experience, and you may not know where to turn.

In such cases, it’s best to seek the advice and representation of an experienced solicitor as soon as possible.

Penalties for insurance fraud

Insurance fraud is regarded as a serious offence, so the courts have imposed severe penalties on offenders. Custodial sentences are expected, with some individuals receiving up to nine months in prison. You may receive a lesser sentence in less severe cases, such as a community order or a fine. Additionally, obtaining insurance in the future may prove to be more challenging.

Cunninghams are experienced insurance fraud solicitors based in Manchester and London, with over 20 years of experience defending clients’ insurance fraud charges. Our team of experienced fraud solicitors have the expertise to help you build a strong case and to support you through each stage.

Cunningham’s initial advice is always free of charge and can be contacted at 0800 051 2542 or enquire online.