Insurance fraud is as diverse as the types of insurance policies that are available, although it can be classified in two ways as either hard fraud or soft fraud. Soft fraud, which is far more common than hard fraud, is sometimes also referred to as opportunistic fraud. One of the most common forms of insurance fraud is the exaggeration of injuries sustained in an accident. A person who sustained genuine injuries may exaggerate their extent, their effect on their ability to work or enjoy life and the length of time it takes for the injuries to heal. These exaggerations are often made with the intention of receiving a higher amount of money.
Because many injuries can be exceptionally difficult to quantify, insurance companies will often engage the services of Detect Inc. to carry out surveillance in order to verify the claim and to establish that what the claimant claims is true and that there are no obvious discrepancies in the symptoms claimed. Another form of lesser known fraud is that of claiming on an insurance policy for injuries sustained before the policy actually came into effect, in an accident, a person may claim to have sustained a debilitating back injury, however, after an investigation it transpires that the injury had been sustained in an incident some months or even years before.
Hard fraud occurs when someone deliberately plans or invents a loss, such as a collision, vehicle and machinery theft, fire and arson that is covered by their insurance policy in order to receive payment for damages. An art collector who insures a high value piece and then has it 'stolen' - claiming the money for himself and keeping the art piece in the process. Criminal gangs are often involved in hard fraud schemes that steal millions of dollars each year.