The Elements of Fraud

A Video Explaining Insurance Fraud and How to Defeat It

To prove civil fraud it is the obligation of an insurer to present
admissible evidence that establishes the requirements of the
common law that generally identifies nine elements needed to
establish fraud:
1. a representation of fact;
2. its falsity;
3. its materiality;
4. the representer’s knowledge of its falsity or ignorance of its truth;
5. the representer’s intent that it should be acted upon by the person in the manner reasonably contemplated;
6. the injured party’s ignorance of its falsity;
7. the injured party’s reliance on its truth;
8. the injured party’s right to rely thereon; and
9. the injured party’s consequent and proximate injury.

The scams—Introduction

Insureds who are intent on pursuing fraudulent claims employ many devices, schemes, and artifices that operate to defraud insurance carriers out of billions of dollars in loss settlements. In an attempt to collect large loss payments, insureds may make untrue statements regarding material facts, conceal the true facts, and submit phony documentation. Values claimed are grossly inflated, deliberate statements are made concerning nonexistent property, and deception and inconsistencies abound in the fraudulent claim. Successful handling, investigation, and defense against such fraudulent and often criminal activity requires a complete understanding of the various elements of property insurance fraud, as well as effective investigative approaches.

There are four general types of fraudulent claim activity which dishonest individuals (insureds and third-party claimants) engage in to recover policy proceeds fraudulently. Those activities involve the following: (1) Obtaining insurance under false pretenses by misrepresenting or oncealing material facts in an application for insurance, (2) Creating a loss, (3) staging a loss, (4) exaggerating the amount of loss and (5) misrepresenting the cause of loss. Some claims involve the creation and exaggeration of the loss and some involve all four types of raudulent claim activity.

Property Investigation Checklists Uncovering Insurance Fraud, 13th Edition available from Thomson Reuters https://store.legal.thomsonreuters.com/law-products/Forms/Property-Investigation-Checklists-Uncovering-Insurance-Fraud-13th/p/106702361