Spotting and Preventing Insurance Fraud: What Every Policyholder Should Know

Learn how to spot, prevent, and report insurance fraud. Protect yourself, your policy, and your community.

Did you know that insurance fraud costs Americans more than $300 billion every year? It’s not just elaborate scams; it can be as simple as someone exaggerating a claim or leaving out details for a bigger payout. Preventing fraud helps keep coverage fair and affordable for everyone.

At NYCM Insurance, we’re committed to protecting our policyholders by helping you understand what fraud looks like and how to stop it before it starts. 

What Is Insurance Fraud?

Insurance fraud happens when someone intentionally provides false information or misrepresents facts to receive money or benefits they don’t deserve. It can occur in any line of insurance: auto, home, workers’ compensation, or life coverage.

There are two main types of fraud:

• Hard fraud: Deliberate acts like staging an accident or filing a fake claim.

• Soft fraud: Exaggerating a legitimate claim or omitting key details to increase a payout.

Common examples include:

• Auto: Staging accidents or inflating repair costs.

• Home: Claiming losses that didn’t occur or overstating damage after a storm or fire.

• Premium fraud: Misrepresenting information — like garaging location or drivers — to obtain a lower rate.

Big or small, every act of fraud adds up.

How to Spot Red Flags

Being alert can help prevent fraud before it happens. Watch for warning signs like:

• Contractors or repair shops who suggest you “pad” a claim.

• Strangers offering to help file claims in exchange for cash.

• Unsolicited calls or emails asking for your insurance or personal information.

If something feels off, trust your instincts. 

How NYCM Protects Against Fraud

Our Special Investigations Unit (SIU) uses advanced technology, data analytics, and decades of experience to detect suspicious claims and stop fraudulent payments before they affect our customers.

This year marks the 30th anniversary of NYCM’s SIU. Since its establishment in 1995, the SIU has played a vital role in safeguarding customers and preserving the trust that defines the company’s commitment to service. Over the years, the unit has evolved to meet emerging challenges, adapting to new technologies, regulatory changes, and fraud trends while maintaining its core mission of protecting policyholders and promoting fairness in the insurance process.

At NYCM, our employees also receive ongoing training to ensure every claim is handled with integrity and care.

What You Can Do to Protect Yourself

You play a key role in preventing fraud. Here are a few simple ways to stay safe:

• Be honest and accurate when reporting claims.

• Keep receipts, photos, and notes about damages or losses. 

• Review medical bills or Explanations of Benefits (EOBs) to verify charges.

• Never sign blank forms or share personal information with unknown callers.

• Report anything suspicious to NYCM’s Fraud Hotline at 888-ALERTUS (888-253-7887).

Stay Smart, Stay Safe

Insurance fraud isn’t a victimless crime, it impacts every policyholder. By staying informed, cautious, and proactive, you can help protect yourself and your community. At NYCM Insurance, we believe awareness is the best defense. Together, we can stop fraud before it starts.