First off.. how does insurance fraud affect me?
Insurance fraud is one of the leading reasons for higher insurance costs. Because of people taking advantage of the system, lying, and stealing from insurance companies, those costs are being passed down to all the clients because of people taking advantage of those. There’s not some sort of magic bucket that an insurance company can just go and pull from to pay for fraud. Those are all going to have to go into the cost of the company that is then distributed through insurance policies. So let’s dive in and tell you about three different instances of insurance fraud, where someone filed a claim that was fraudulent and then was caught.
Amputation For Some Quick Cash?
The first story is about these three guys whose names are Dave, Gerald, and Michael. Well, they come up with this ridiculous scheme that they’re going to go out, cut down a tree with a chainsaw, and then cut off one of their arms and then file it underneath a homeowner policy. So they decide that they’re going to do this. Dave is the guy that comes up with the idea. Gerald is the one that has the homeowner policy as well, as an umbrella policy. And then Michael is the poor guy that’s going to lose his arm.
So they go out, they cut down this tree and they sever Michael’s arm and they take Michael, as well as also the severed arm, and they bring him back to the hospital to try to see if he can get that arm sewed back on. Well, the doctors can’t. Dave still wants to go ahead and file the claim. They get one and a half million dollars between the liability policy, as well as also the umbrella policy, and divide that three ways, so each one of them gets half a million dollars. Poor Michael, he gets his half a million dollars, but also he’s missing an arm.
Well, they wind up finding out that this was a big scheme and they took advantage of Michael because he had a learning disability. Yeah. They paid him 500,000, but they took advantage of him because of his learning disability and they brought him to court, and Dave and Gerald wind up spending time in jail because of the fraud. They’re able to recover some of the money, but not all of it, and more important, Michael is still there without his arm.
“Friendly” Duck Hunt Gone Wrong!
Story number two involves a duck hunt and a couple of buddies. So these two guys, they like to go in hunting and fishing, things like that together. And one day they decide to go out for a duck hunt. Well, they go out and their names are Hank and Chuck. Well, Hank doesn’t make it back and Chuck does. Chuck comes back and he’s upset. And he says, “I don’t know what happened. Hank fell overboard. I tried to find him. I couldn’t find him.” They call search and rescue, 911. They come out, try to find Hank’s body and they can’t find him anywhere. So they’re assuming that he just was lost to the swamp or an alligator ate him, or who knows what happened.
Andrea was married to Hank and she files underneath their life insurance policy to take care of her expenses. There’s no other claim filed. Andrea doesn’t file any sort of liability loss against Chuck for loss to her husband because it is just an accident. But fortunately, she did have life insurance in place and was able to file for a million and a half underneath the life insurance, so that she could go on with her life, take care of the funeral expenses, and then also provide a living income for herself.
Well, we fast forward about a year later, and we come up to an event where the police respond to an incident where Chuck is holding Andrea at gunpoint, arguing and holding her at gunpoint, and yelling. You know, she’s yelling back at him. “You did it. You did it. You did it.” Well, they arrest the two of them and start questioning them to figure out what in the world’s going on. What’s up with this, the fight that you’ve got. Well, we wind up finding out that the two of them come up with this plot. They’ve been seeing each other for years now and Andrea won’t talk, but Chuck says, “Hey, look, I will tell you everything if I get a lighter sentence and I’ll even bring you to where the body is if we get a lighter sentence,” or he does.
So he tells, and the story is that decided to make a plan between the two of them, to take Hank out for a duck hunt and that Chuck would get rid of Hank. So Chuck shot Hank in the face, killed him, and then buried his body out in a swamp where nobody could find him. Then Andrea and Chuck divided the money.
Well, fast forward. There’s this incident now where they’re arguing with one another and Chuck is holding Andrea at gunpoint. Well, they both do time for insurance fraud, as well as also murder, obviously. Chuck does get a little bit of a lighter sentence, but they both spend time in jail.
Five Insurance Policies For One Arm?
The next incident involves a woman that’s 22 years old and her boyfriend and her having an incident where she cut her hand off while cutting tree limbs. So one day she’s out there and she’s cutting down these tree limbs with an ax and somehow an accident happens that severs her left hand. Well, they bring her to the hospital and they’re able to reattach her hand and regain most of the movement back in it. Well, she had an accident policy in place that was going to take care of the damages for that severed hand. Matter of fact, she had five accident policies that she had bought only six months prior to that.
They ended up being around about a million and a half dollars between five different policies that she had. Sounds a little suspicious, right? Well, whenever the different insurance companies, all of a sudden realize, “Hey, there’s five of us involved in this claim,” they started investigating to see what was going on.
Well, they find out that the boyfriend and the girl had decided to come up with this plan to defraud the insurance companies and to make a claim on these policies that they had just bought only six months prior. They wound up going to court and finding out that they did indeed commit fraud and instead of claiming the one and a half million dollars, they wind up getting 30 years in jail. Look, fraud eventually catches up with people, and sometimes people do get away with it, unfortunately. But too many times, they’ll wind up talking about it and there’s an opportunity for people to bring them to justice.
Report It When You See It!
Insurance fraud is one of the leading reasons for insurance costs rising each and every year. You know each and every one of us can do something about insurance fraud and try to do our part to make sure that, we’re not taking advantage of the insurance companies. But more importantly, if we see some sort of incident where someone is committed fraud, hey, report it to your local Department of Insurance or your insurance agent or your insurance company, if you know who those are.
But if you don’t, you probably won’t know those two things, but you can at least report it to the Department of Insurance for your state and let them know, “Hey, I think I see an incident of insurance fraud,” and they will take care of the rest and probably leave your name out of it completely. So, hey, do your part and help lower your insurance costs by reporting fraud when you see it.
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Beaux Pilgrim, CEO
Beaux Pilgrim
Reed Insurance