Insurance fraud costs insurance companies billions of dollars each year.
Although staged automobile accidents, arson and even murder can be part of an insurance fraud scheme, often, fraud is much more subtle.
For example, soft fraud can include overbilling insurance companies in an otherwise legitimate claim.
It also includes omissions or so-called white lies on an application for insurance coverage. These deceptive tactics trick a carrier to provide insurance coverage they never would have provided if they had known the full truth.
Insurance companies invest of lot of time and resources in investigating and combatting insurance fraud.
However, carriers also need to make sure that these investigations can hold up in the face of scrutiny from a court or Nevada regulator. Taking the wrong steps in an investigation could mean that the insurance company must pay or settle a claim they know is fraudulent.
In the worst-case scenario, an insurance carrier may even wind up facing a bad faith claim.
Like in other states, to prove insurance fraud in Nevada, ordinarily the insurance carrier or law enforcement agency will have to show intent. Careless mistakes on the part of a policyholder or other person are not insurance fraud.
However, insurance carriers may have other options for cancelling a policy or denying a claim even if intent is hard to prove.
Special Investigations Units and others tracking and responding to fraud will need to know what the insurance policy in question says and what their options are given the circumstances of the case. As with any investigation, attention to detail, efficiency and thoroughness will be critical.
Insurance carriers will want to know their options in a dispute over fraud
Oftentimes, fraudsters are sophisticated and can make some clever and convincing legal arguments for why a court or a regulator should compel an insurance carrier to pay the fraudster.
They can even make it look like it is the insurance company, and not the fraudster, that is violating the law. Carriers in a close case, particularly if litigation has started or is threatened, should make sure they know their options and alternatives.
