Claims professionals also should look for certain red flags that may indicate what the insurance industry refers to as "soft fraud." Photo: Leonard/Adobe Stock
Insurance fraud, like other crimes, continues to evolve as fraudsters become more creative. Arson, the crime of intentionally and illegally setting fire to a building or other structure, has long worsened claims activity for property insurers. Today, in many ways, water is the new fire.
Previously, property owners might have ignited a fire for a remodel, to get out of their mortgage, or to collect a financial windfall from their insurance claim. Fires, especially arson for profit, created a higher risk because controlling fire is very difficult. When someone sets a building on fire, there's a strong possibility that a firefighter or an innocent bystander could be injured. Water damage is easier to control, plus the risk of injury is much lower.
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