Intentional losses
It is estimated that 37,500 structural fires and 30,500 vehicle fires in 2003 were intentional. Property damage from these fires amounted to approximately $692 million in structural damage and $132 million in vehicle damage.
These figures do not include indirect costs, such as business interruption, loss of use, and temporary shelter costs, nor do they take into consideration human suffering and human loss exposure costs. such as medical expenses and funeral
costs.111
Many cases of arson or suspected arson involve insurance—some property owners would rather have the insurance money than the property.
Exaggerated losses / Claim buildup
Arson is an intentionally staged accident and it represents one form of insurance fraud. The intentional exaggeration or loss in an otherwise legitimate claim is a more common form of insurance fraud.
These exaggerations are also referred to as claim buildup.
For example, an insured may claim that four items were lost rather than the actual three or that the items were worth
more than their actual value. In liability claims, claimants may exaggerate the severity of their bodily injury or property damage.
Physicians, lawyers, contractors, and auto body shop operators can also be participants in claim buildup.
Cost of insurance fraud
Insurers are actively involved in the fight against insurance fraud and use various techniques to detect and investigate suspicious claims. Nevertheless, insurance fraud is a serious problem that results in billions of dollars in excess insurance payments each year.
Fraudulent claims increase costs for both insurers (in terms of both payment for fraudulent claims and the cost of investigating and resisting fraud) and insureds (who pay increased premiums to help cover the cost of those who defraud insurers).
Unintentional losses / Carelessness
Some losses may not be deliberately caused, but they may result from carelessness on the part of an insured because insurance is available to pay for losses if they do occur.
Routinely leaving the keys in an unlocked car is an example of such carelessness. If the car is stolen, the insured would suffer only minimal financial consequences because the insurer will pay for the loss.
The additional losses that result from insureds‘ carelessness increase the cost of insurance for everyone because insurers often pay for injuries and damage that insureds could have prevented.
Increased lawsuites
Liability insurance is intended to protect people who may be responsible for injury to someone else or damage to someone‘s property. However, some people may view liability insurance as a pool of money available to anyone who has suffered injury or damage, with little regard given to fault.
The increase in frivolous lawsuits is an unfortunate cost of insurance in today’s society.
It is estimated that 37,500 structural fires and 30,500 vehicle fires in 2003 were intentional. Property damage from these fires amounted to approximately $692 million in structural damage and $132 million in vehicle damage.
These figures do not include indirect costs, such as business interruption, loss of use, and temporary shelter costs, nor do they take into consideration human suffering and human loss exposure costs. such as medical expenses and funeral
costs.111
Many cases of arson or suspected arson involve insurance—some property owners would rather have the insurance money than the property.
Exaggerated losses / Claim buildup
Arson is an intentionally staged accident and it represents one form of insurance fraud. The intentional exaggeration or loss in an otherwise legitimate claim is a more common form of insurance fraud.
These exaggerations are also referred to as claim buildup.
For example, an insured may claim that four items were lost rather than the actual three or that the items were worth
more than their actual value. In liability claims, claimants may exaggerate the severity of their bodily injury or property damage.
Physicians, lawyers, contractors, and auto body shop operators can also be participants in claim buildup.
Cost of insurance fraud
Insurers are actively involved in the fight against insurance fraud and use various techniques to detect and investigate suspicious claims. Nevertheless, insurance fraud is a serious problem that results in billions of dollars in excess insurance payments each year.
Fraudulent claims increase costs for both insurers (in terms of both payment for fraudulent claims and the cost of investigating and resisting fraud) and insureds (who pay increased premiums to help cover the cost of those who defraud insurers).
Unintentional losses / Carelessness
Some losses may not be deliberately caused, but they may result from carelessness on the part of an insured because insurance is available to pay for losses if they do occur.
Routinely leaving the keys in an unlocked car is an example of such carelessness. If the car is stolen, the insured would suffer only minimal financial consequences because the insurer will pay for the loss.
The additional losses that result from insureds‘ carelessness increase the cost of insurance for everyone because insurers often pay for injuries and damage that insureds could have prevented.
Increased lawsuites
Liability insurance is intended to protect people who may be responsible for injury to someone else or damage to someone‘s property. However, some people may view liability insurance as a pool of money available to anyone who has suffered injury or damage, with little regard given to fault.
The increase in frivolous lawsuits is an unfortunate cost of insurance in today’s society.
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