What defines "insurance fraud"?

Insurance fraud is specifically defined as an intentional deception or misrepresentation made for the purpose of financial gain. This means that an individual—whether they are an insured party or representing an insurance provider—deliberately provides false information or fails to disclose relevant facts with the aim of securing an undeserved benefit, such as receiving a payout for a claim that is not legitimate or creating fraudulent documentation to support a claim.

The nature of fraud lies in the intent to deceive, which differentiates it from other situations such as unintentional errors or misunderstandings. For instance, an unintentional error in policy details does not involve malice or deception; it simply signifies a mistake. Similarly, a legitimate claim that was denied, or a misunderstanding between the insurer and insured, does not encompass fraudulent intent. By recognizing that fraud involves purposeful misrepresentation, we can understand the serious legal and ethical implications it carries in the insurance industry.