Understanding Insurance Fraud

What is the core principle of insurance?

Exaggerating the value of damaged property in a claim is considered insurance fraud.

Insurance fraud is only a crime if a claim is paid out.

Maria was involved in a motor vehicle accident after another driver ran a red light and struck her vehicle. The other diver’s insurance had lapsed resulting in her liability claim being denied. Thankfully, Maria has collision coverage on her policy but has a high deductible.  Feeling frustrated she decides to exaggerate the repair costs to cover the deductible, telling herself, “Everyone does it, so it’s no big deal.”

What rationalization is Maria using?

James is short of money and decides to cancel his car insurance. On his way to work, he runs a red light and hits Maria’s car causing damage to both vehicles. James gets online and reinstates his insurance. James gives Maria his insurance information and tells her to wait until the next day to file a claim and to tell the insurance company the accident occurred at a later time.

Which factor best describes James’s psychological factor?