Evan Schwartz, founder of Schwartz, Conroy & Hack PC, continues his discussion by diving deep into several common insurance recovery questions our firm encounters.
Insurance fraud and rescission are terms you often hear in insurance recovery practice. But what do these terms really mean? In this article, we will explore these concepts and provide insights into their implications for both individual and business insurance policies.
What Are Some Examples That An Insurance Recovery Practice Includes Insurance Fraud?
One of the examples that we see frequently in the individual recovery area, but also in the business recovery area is something called rescission or making false statements on the application for insurance.
What is Rescission?
Rescission is a term typically encountered in the individual insurance context, particularly with policies such as long-term disability, long-term care, or life insurance. It refers to situations where the insurance company discovers that you, as an insured individual, made a misrepresentation on the application that affected their decision whether to issue the policy. As a result, they seek to rescind the policy, essentially acting as if the policy was never issued. Misrepresentation can take many forms and the phenomenon is more common than you might realize.
There’s also the concept of contestability – the right of the insurance company to contest the policy and its existence due to misrepresentations on the application. It’s a complex process that often requires a lawyer’s evaluation to determine if a question asked and the answer given are indeed misrepresentations, and if they were material to the insurance company’s underwriting process.
This all underscores the importance of being completely honest when filling out an insurance application. A simple ‘innocent’ misrepresentation could lead to substantial legal issues down the line.
How Does Fraud Happen In The Insurance Claim Process?
Fraud can happen in the insurance claims process in several ways. The most common forms include making false statements on your proof of loss or claim forms, as well as any sworn statements. This is known as false swearing, and can lead to a complete negation of your claim.
There’s also the danger of overstating the value of your claim, either innocently or intentionally, which can be deemed as fraud. It’s critical to base your claims on accurate, realistic figures. As the saying goes, honesty is the best policy, especially when you’re dealing with insurance claims.
What Types of Fraud Claims are Happening in the Automobile/Health Related Space?
The incidence of insurance fraud is particularly high in the automobile and healthcare industries. With the advent of no-fault insurance, there’s been an increase in over-treatment by healthcare providers, often with the intent of maximizing their reimbursement under no-fault insurance policies. This conduct has led to many insurance companies bringing fraud and civil RICO claims against healthcare providers in an attempt to recover their losses and put an end to fraudulent billing.
In conclusion, insurance recovery practice encompasses a wide range of issues, including insurance fraud and rescission. As policyholders, it’s crucial to understand these concepts, as they can have significant impacts on your coverage and claims. Always remember to give accurate and honest information when dealing with insurance matters to avoid any unfortunate surprises in the future.
