Fast facts – the five most common insurance scams:
- Auto claim fraud and staged crashes (inflated damage, soft-tissue injuries, and total-loss padding).
- Targeted scams against Medicare beneficiaries (AI-driven robocalls, telehealth/lab billing, identity theft).
- COVID-19-related testing, telehealth, and unemployment insurance scams are still being prosecuted; in 2024, DOJ charged 193 defendants in a national takedown alleging about $2.75 billion in intended losses.
- Workers’ compensation fraud (false/exaggerated injuries, provider billing schemes, and employer premium evasion/misclassification).
- Home contractor scams against home owners (post-disaster “storm chasers,” fake listings, and pressure for large up-front deposits).
Insurance fraud is one of America’s largest crimes. The FBI estimates historically cited losses in the tens of billions, but the Coalition Against Insurance Fraud now estimates the total annual cost across all lines at about $308.6 billion—well more than double earlier figures—and much fraud still goes undetected. Industry sources also estimate that roughly 10% of property/casualty claim costs are affected by fraud or “build-up.”
Insurance scammers prey on victims in every category of income, age, education, ethnic background, and location. They increasingly exploit digital channels—AI-enhanced robocalls, spoofed texts, and social media—along with fears during crises, to harvest personal data and submit bogus claims.
“A big misconception is that insurance fraud is a victimless crime or harmless prank,” said James Quiggle with the Coalition Against Insurance Fraud. “The costs of fraud are passed onto all consumers in higher premiums.” Here are some of the most common forms of insurance fraud and how you can protect yourself.
Auto insurance fraud
Car insurance fraud ranges from misrepresenting facts on insurance applications and inflating insurance claims to submitting claim forms for bogus injuries or damage, and much more. There are also several different types of staged car accidents that scammers will use to try to swindle your insurance or their own insurance company out of money. Vehicle theft-related schemes also remain a pressure point as thefts stayed elevated in 2023, with 1,020,729 vehicles reported stolen.
There are a few ways to protect yourself from these scams. For starters, never tailgate. Allowing enough distance between you and the cars ahead will give you enough time to brake should the car in front of you suddenly stop. If you are involved in a collision, however, be sure to count how many passengers were in the other car.
[ Read: The Best Car Insurance Companies ]
Take down names, phone numbers and driver’s license information. Sometimes more people than were actually in the car will try to file claims. Take cell-phone pictures of the other car, the damage it received — and the passengers.
Be cautious if anyone urges you not to involve law enforcement or your insurer — that’s a red flag that can open the door to false claims. Call the police to the scene. Get a police report with the officer’s name, even if it’s just minor damage.
Medicare scams
Medicare recipients, take note. Scammers are out there targeting you, specifically as it pertains to your Medicare number and card. In April, the Centers for Medicare & Medicaid Services began sending out new cards to Medicare beneficiaries. These cards are meant to be more secure, yes, but do not come with a fee. Anyone who contacts you claiming to represent Medicare and trying to charge you for your card is trying to scam you. Today, criminals also use AI-generated robocalls, spoofed texts, and unsolicited COVID-19 test kits to harvest Medicare numbers and submit unauthorized claims.
Do not provide your social security number, bank or credit information, or wire cash to anyone who tells you that you must pay to receive your card. In general, never give out your Medicare number to anyone you don’t know or didn’t contact first. And never let strangers help you complete applications or forms that include personal information. Always consult a trusted family member or friend.
Always remember, you have the right to hang up or delete messages that seem off or make you feel uncomfortable. If you do receive a suspicious call, contact the Medicare office (1-800-MEDICARE). And if for any reason, you receive a new Medicare card, be sure to shred your old one before you toss it. You can also report suspected Medicare fraud to the HHS OIG Hotline (1-800-HHS-TIPS). Medicare’s special coverage for over-the-counter COVID-19 tests ended in 2023; unsolicited test kits or related billing are red flags.
COVID-19 scams
Since January 1, the Federal Trade Commission has received over 90,000 COVID-19-related reports involving online shopping and travel-related scams. The online shopping reports typically consist of ordering products that never arrive, while most of the travel and vacation reports relate to refunds and cancellations.
The Coalition Against Insurance Fraud warns consumers to be on the lookout for fake travel insurance policies that claim to cover COVID-19-related cancellations. Keep in mind that most travel insurance policies do not cover pandemics, so if someone tries to sell you travel insurance that specifically covers COVID-19 issues, that’s a red flag.
So far, people have reported losing $59.27 million on these and other COVID-related fraud reports. Check the FTC’s state-specific data on pandemic-related issues. This resource allows you to search by your state to see what people near you have been reporting. Then check this comprehensive list of advice on how to prevent yourself from becoming a victim to a coronavirus scam.
Workers compensation and medical fraud
Workers compensation insurance protects employees if they’re hurt on the job. Only a small number of scammers work this system, but their damage is huge. Premium evasion and provider-driven schemes remain top enforcement priorities, and fraud adds materially to overall claim costs across the industry.
Employers who misrepresent their payroll or the type of work carried out by their workers to ensure lower premiums are committing workers compensation fraud. Common tactics include misclassification, “ghost” policies or fake certificates, and routing payroll through shell subcontractors to hide higher-risk work.
On a related note, fraud in the medical field includes “upcoding,” when health providers exaggerate treatment provided to injured workers or bill for procedures that were never performed. “Consumers should stay alert to the warning signs of a scam,” Quiggle says. “Pay close attention to your medical bills to make sure you’re charged for procedures and treatments you actually had.”
Home contractor fraud
That harmless knock on the door could be a bogus contractor. If a contractor approaches your home and says he has materials left over from a previous job, it could be a scam. Also keep in mind that contractors who only accept cash, ask you to pay everything up front, or suggest that you borrow money from one of their lenders, is likely a home contractor scam.
Before you agree to any contractors’ work, the FTC suggests a number of precautions in order to avoid fraud, including getting a written contract, keeping detailed records, and not making a final payment until you are completely satisfied with the work. In short, Quiggle says, “Have a signed contract and never give a contractor the full payment in advance.”
The bottom line
Fraud is big business, and one that affects us all. Medicare, auto, workers compensation, home contractor, and COVID-related fraud run rampant, but they’re unfortunately just the tip of a fraudulent iceberg. The Coalition Against Insurance Fraud provides a detailed list of the many other types of fraud.
Never give out personal information to strangers or those you don’t trust, and beware of cold calls or knocks on your door from those offering unsolicited services. With these tips, you’ll help ensure that you’re not a target or a victim. And remember: most insurance fraud goes undetected or unreported, so if you suspect fraudulent activities, contact the National Insurance Crime Bureau or submit a form online.
