Fraudulent and dishonest insurance claims are a major problem for the insurance industry. In regards to only vehicle insurance a recent survey suggested that the members of the ABI (Association of British Insurers) uncovered £5m of fraudulent claims every single week. These costs are often passed onto the policyholders in the shape of higher premiums.

Most insurance companies have their own anti-fraud units that work to make sure that all the claims that are submitted are valid and accurate. It can, however, be a difficult job to undertake. To establish that any fraud has actually taken place some concrete evidence of lies, inconsistent statements or acts of deception have to be found. Legally speaking insurance companies can refuse to payout if they can prove that information has been intentionally withheld, but that's very difficult to do. Proof has to be obtained that is more concrete than mere suspicions that a claimant is dishonest.

Any fraudulent claim is based on the intent to deceive and a desire to induce the firm to pay more than it otherwise would. How one proves a claimant's motives can sometimes be difficult, but sometimes quite clear cut, there are famous examples of fraudulent claims that have gone spectacularly wrong and resulted in criminal prosecutions.

One of the problems is that the regulatory bodies that are in place to protect the insurance companies, and thus by extension honest policyholders, are so removed from the process that by the time the insurance company goes about trying to obtain proof of fraud it is unlikely that any new information will come to light. The company will have made it apparent to the claimant that there are problems in their version of events and accordingly the claimant will have had plenty of time to concoct an explanation, or to further confuse the issue.

It is a difficult job for these regulatory bodies, the insurance company just wanting to not pay out because it suspects fraud is only one way of looking at it. From the point of view of the claimant who may be innocent and find that their claim has been rejected on account of some oversight on their part at the time of filling out the application form, it's as difficult to prove innocence as it is for the company to prove deception.

Ultimately the best way to avoid this as a claimant is to make sure that you haven't made the mistakes in the first place. Insurance companies require every piece of information that they can get in order to make an accurate prediction as to the correct cost of the policy. In regards to health insurance, make sure that you check with your doctor before your notes are passed on, or in the case of other forms of insurance try and make sure that you get a second opinion to confirm your facts. You must keep copies, and remember that whilst certain information might make a policy more expensive, withholding such details will only make everything a lot more expensive in the future. If you do your research thoroughly, you will find a good value deal, no matter what details you include.

For home insurance, use a reputable firm such as RIAS.