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When it comes to fraudulent claims, travel insurers are no strangers. It is estimated that over 10% of all claims are fraudulent or deceptive in some way or another. From telling tales, to exaggerations of the truth or just fabricated lies, insurers really have seen it all.

Whether you are trying to claim for a non-disclosed pre-existing medical condition, bending the truth about how an incident occurred or exaggerating the cost of your lost luggage, insurers are very good at finding the inconsistencies in your story.

Whatever the case, insurance fraud simply put is a form of theft and is illegal. If you choose to do this no matter how little the fibs are, the consequences could be severe, from a hefty fine or even imprisonment! It’s simply not worth the risk.

What is Considered Fraud

The most common type of fraud that insurers come across is where the insured has a legitimate claim and exaggerates it. So instead of losing their $20 K-Mart travel bag it suddenly becomes a $2,000 Prada handbag. Or the lost bag just so happens to have also contained a new iPhone, and camera too. Hmmm!

This occurs when the policyholder intentionally chooses not to disclose a pre-existing medical condition. Then when making a claim they provide misleading information suggesting the condition is new and unforeseen. Also when the circumstances of how an incident occurred are not disclosed.

This is the higher end of the fraud spectrum and can include things like identify theft, staged incidents involving the deliberate fabrication of a claim or providing fake documents to substantiate a claim. Premeditated fraud is premeditated with the sole purpose of committing a crime.

Industry Insider: Attempted fraud is not uncommon

Attempted travel insurance fraud is common. The average fraudster isn’t photoshopping receipts for items never purchased for holidays that never happened though – it’s more often exaggerating the value of stolen luggage, claiming items against both a standalone and credit card policy, or misrepresenting misplaced items as stolen.

A very common fraudulent claim is for mobile phones. Many travellers think that they can take an old iPhone with a broken screen on holidays, claim for it, and then simply upgrade to the latest model. As a result, we are increasingly seeing insurers reduce or remove coverage for cracked screens altogether.

Richard Warburton, Chief Operating Officer of 1Cover Travel Insurance said “While some people like to convince themselves that this is a victimless crime – a big insurer won’t miss $800, right? – it’s important to understand that the insurer reserves the right to go to the police, which can lead to charges.”

In the digital world that we live in, fraud detection has become more sophisticated and information can be validated regardless of where you’ve been traveling. Travel insurance companies are well versed at identifying flawed stories and odd receipts. They also have access to private investigators for more complex claims.

Fraud costs everyone – including fraudsters!

According to the Insurance Fraud Bureau of Australia, insurance fraud of all kinds costs honest policyholders up to $2.2 billion every year.

Insurance fraud in NSW is typically dealt with under Section 192E of the Crimes Act 1900, with the maximum penalty being 10 years.

Many insurers add obvious fraud cases to Do Not Insure blacklists. This means that while people may think they’ve gotten away with fraud attempts, they might find it impossible to get car, health or home insurance in the future.

For severe cases you could face legal consequences like a hefty fine or even imprisonment. It’s simply not worth the risk!

Examples of fraud include

Claiming for items that were never lost, stolen or owned
Overstating/exaggerating the value of items, you are claiming
Claiming for damages that never occurred or occurred prior to your trip
Fabricating evidence to support your claim
Submitting fraudulent documents in support of a claim
Falsifying the circumstances of an incident that led to a loss or accident
Claiming expenses that were recovered or compensated from another source

When are legitimate claims paid?

Waiting a few business days might seem inconvenient for customers (and their wallets), but it’s important for insurers to be prudent in catching the fakes to keep travel insurance affordable for everyone.

Travel insurers will generally assess claims within ten business days. If they don’t, they are required to let you know what other documentation they require or provide you with a timeframe on when it will be processed.

Lets remember that travel insurance is designed to help people when misfortune strikes, and fraud bumps up the premium for these unfortunate onest travellers. It’s in the interest of travellers and travel insurers alike to stop fake claims in their tracks!

How to have a successful claim

Understand what is covered and what is not, paying particular attention to exclusions and how to make a claim.

Have receipts, bank statements, photographs, photocopies or serial numbers so you can prove ownership of your belongings.

Get letters from your airline of flight delays & cancellations, and medical certificates for hospital stays - all written proof helps to back up your claim.

It’s vital that you report any loss, theft or damage to your insurer, the local police, transport provider, or the relevant authority within 24 hours, or asap!

When you buy your policy and disclose any pre-existing conditions. If you lie about your medical history your insurer may deny your claim.etsetters can find a policy that will cover for flight cancellations (for unforeseen reasons) even if tickets were booked using points.

All insurers have telephone numbers to call in an emergency. It is a good idea to keep this number on you, along with your policy details.

Travel Insurance Fraud FAQs

What happens if you lie on an insurance claim?

What are the consequences of lying on an insurance claim?

If you are found to be exaggerating a claim or bending the truth you will have to face the consequences. The most probable outcome in most cases is that your claim will be rejected and/or your policy cancelled. Many insurers add obvious fraud cases to Do Not Insure blacklists. This means that while people may think they’ve gotten away with fraud attempts, they might find it impossible to get car, health or home insurance in the future. For severe cases you could face legal consequences like a hefty fine or even imprisonment. It’s simply not worth the risk!

Do insurance companies investigate claims?

Travel insurance companies are well versed at identifying flawed stories and odd receipts. They also have access to private investigators for more complex claims.

What do I need to make a claim?

It largely depends on what you are claiming for. If it’s for lost or stolen items, you’ll need a police report within 24 hours and make sure you hold onto your receipts to prove ownership and value. If it’s medical expenses, your insurer will need to see doctor’s records and treatment received. If a non-disclosed pre-existing medical condition is suspected they may ask for medical history or a doctor’s declaration to confirm this.

Can I make a claim without a receipt?

For expensive items such as mobile phones, laptops or cameras, proof of purchase will be required. Insurers usually accept purchase receipts or tax invoices with proof of payment. Bank statements or credit card details may also be used to substantiate your claim. Without proof of purchase, your claim may be denied. And as always, check with the insurer of your choice for more information on this. Customers who have a legitimate claim are often annoyed that they need to search for old receipts or bank statements to demonstrate proof of purchase. With retailers all over the world embracing digital receipts and new online claims systems accepting uploads of photos and receipts, providing real evidence has never been easier.

Should I take a photograph of my items for proof that they are mine?

It varies from insurer to insurer, but in some instances, taking a photograph is not enough. In the insurer’s eyes, you could just take a picture of any Tom, Dick, or Harry’s belongings.For expensive items such as mobile phones, laptops or cameras, proof of purchase will be required. Insurers usually accept purchase receipts or tax invoices with proof of payment. Bank statements or credit card details may also be used to substantiate your claim. Without proof of purchase, your claim may be denied. And as always, check with the insurer of your choice for more information on this. Customers who have a legitimate claim are often annoyed that they need to search for old receipts or bank statements to demonstrate proof of purchase. With retailers all over the world embracing digital receipts and new online claims systems accepting uploads of photos and receipts, providing real evidence has never been easier.