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What are hard fraud and soft fraud in relation to insurance?

Many people have various types of insurance to make sure that they are covered in the event of an accident or other unexpected situation. You likely also have insurance that is required by Colorado state law, like car insurance.

Because insurance policies can provide you with funds when an injury or damage-causing incident takes place, you likely appreciate the coverage you have. However, you likely also know that some people may attempt to obtain a payout when they may not necessarily need it, which could constitute insurance fraud.

Hard fraud vs soft fraud

Insurance fraud can come in a variety of forms, but typically, all actions considered fraudulent can fall into the categories of hard fraud or soft fraud. Information on those categories include the following:

  • Hard fraud involves extensive actions carried out with the intent to deceive an insurance company. For instance, if a person stages a car accident then files a claim with their auto insurance company to receive compensation, that action is considered hard fraud.
  • Soft fraud occurs when a person stretches the truth in hopes of obtaining insurance payouts. For example, a worker may say that he or she contracted an illness from a work environment and cannot come in as a way to hopefully obtain workers' compensation.

As with all types of fraud, someone trying to commit insurance fraud hopes to obtain some type of financial benefit through deceptive means. While workers' compensation fraud is considered the most common type of soft fraud, insurance fraud can relate to various types of insurance, including Medicare, home insurance and life insurance.

Is one worse than the other?

While both hard fraud and soft fraud are illegal, public opinion apparently considers soft fraud as a less serious crime than hard fraud. Many individuals even think that certain types of soft fraud are acceptable. However, the criminal justice system does not find any type of insurance fraud acceptable.

If you face accusations of insurance fraud, you will need to carefully address your situation. You certainly do not want false accusations or misunderstandings to negatively affect your life, and obtaining information about your legal options may help you effectively handle any charges brought against you. Because creating and presenting a criminal defense can be complicated, you may want to enlist the help of an attorney to guide you through the legal proceedings.

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