Motor insurance is the bread and butter of almost all the general insurance companies in India. Major chuck of the premium is received by underwriting motor insurance policies. The motor portfolio accounts for at least 40-60 % of the book size of the insurers. The high premium received is due to the mandatory third party insurance under the Motor vehicle act. But sadly motor insurance claims account for the major expenditure of the insurance companies, due to the third party claims, own damage claims. In addition to this the fraud claims account for the increase in expenditure of the insurance companies.
Insurance fraud is any act committed with wrongful or criminal deception intended to result in financial or personal gain using insurance as a means. The fraud in insurance is increasing each year and is burning a hole in the pockets of insurance companies which directly affects the renewal premiums paid by the common people.
Most of the fraud claims occur when the traffic rules are not followed resulting in accidents. The insurance claims for violating the terms and conditions of the policy are not paid, making the customer go for fraudulent means. The most common types of fraudulent claims are explained below which happen in our day today life.
Common types of fraud claims:
- Old damages: Damages that occurred before the commencement of the policy are not payable by the insurance companies. For example you had a dent on right door of your car which happened last year, this year after renewing your insurance policy you have met with an accident and bumper is damaged. Now the insurance company you go for claim will not to replace or repair the dent on the right door as the damage is not due to the accident this year.
- Drunk & Drive: Drinking while driving or driving after drinking is a very dangerous act which may lead to accidents and deaths. Drunken drive is punishable offence under Indian penal code. Some people drive their cars after drinking alcohol and are responsible for accidents. They later try to claim the damage to their car under insurance which is not covered under the insurance policy. For example Mr.A had hit his car to a pole after having alcohol and wanted to claim under his motor insurance policy, he knew very well that if he mention himself as driver in the claim form he would not be eligible for the claim, so he cleverly mentioned his brother Mr.B as the driver at the time of accident and made a request for claim.
- Driving without Valid Licence: As per the Motor vehicles act it is mandatory for every person to have a valid driving licence. Many people drive their vehicles without having a valid driving licence and are responsible for many accidents in the country. Driving a vehicle without valid licence is a punishable offence and a heavy fine will be imposed on the driver. In some states parents are held responsible for letting their children drive the vehicles without valid licence. For instance, Mr. Harris’s son has taken out his father’s car for a drive without having valid licence and met with an accident. Now to save his son Mr. Harris claims that he was driving at the time of accident. This is also done to claim insurance as it is mandatory for driver to have a valid driving licence for insurance claim.
- Speed Test: Vehicles used for speed testing such as Race competitions are not covered for damages under motor insurance. It is very common for youngsters to indulge in race competitions or speed tests with their vehicles which can cause accidents resulting in damage to vehicles. These damages caused due to speed tests are not covered under the motor insurance policy. So, to claim insurance some people lie in their claim information sheet that the vehicle is met with accident in its normal course while the actual reason would be different.
Don’t try to fool insurance companies with fraud claims, if caught you’ll be punished under Indian penal code for cheating. Fraud claims are suspected and thoroughly enquired by the insurance companies before settling the claim. So, it is advisable to prevent yourself from indulging in fraud claims.
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