Insurance fraud is a scourge on society. There is no doubt that honest policyholders have to bear the brunt by paying increased premiums and in the current economic climate there would be no reason to suggest that fraud will not reduce. Whilst insurers, the police and other authorities have worked together to limit fraudulent activity, staged accidents are not rare and are difficult to pin down. The thought process and actions of such individuals or groups relates to deliberately driving recklessly to ensure that a claim for their “injury” and damage to a vehicle is paid by insurers. The dangers go further. What if the victim and passengers are genuinely seriously injured? Its probable that these fraudsters neither think nor care.

But it’s not just organised fraud that is a problem. Fraudulent activity also extends to policyholders who exaggerate or falsify the circumstances of an otherwise legitimate claim. The Financial Service Ombudsman arbitrates over disputed claims where suspected fraud has taken place, an interesting example of this is on their website and below:

In June 2000 Miss D insured her campervan. Weeks later, on 12 July, she went on holiday to Grenada. When she returned on 28 August, she reported the campervan missing, presumed stolen and it was never found.

When the firm questioned her about the claim, Miss D said she had bought the campervan in May 2000 and had paid £9,700 in cash. She said it had been advertised for sale in a newspaper and that she and a friend, Mr W, arranged to meet the seller in a pub. She said she had bought the campervan on the spot and had driven it home. She later explained that most of the cash for the campervan had come from the sale of her previous car for £6,250 some six months earlier. She said she had kept that cash in her flat until she bought the campervan. She could not explain how she obtained the balance of £3,450. The firm was unable to contact Mr W, any of his neighbours, or the previous owner of the campervan. It discovered that the dealer to whom Miss D claimed to have sold her car did not exist. A jeweller had been operating for the last six years from the address she gave as the car dealer’s. The firm also found that the campervan had been written off in 1990.

This complaint was rejected by the FOS as it is not normally the business of a firm to investigate how a policyholder has financed the purchase of a vehicle. But it is legitimate for the firm to make enquiries when there is doubt about the vehicle’s ownership. No one else beside Miss D had claimed to own the vehicle, but there were many conflicting details in the case and Miss D was unable to explain them. The firm was therefore justified in refusing to pay the claim.

Legitimate claims will always be paid by insurers, whether it is a short term car insurance, cheap liability insurance or an unnocupied insurance claim – the key to a smooth claim is not to exaggerate, or falsify any part of a claim however tempting.