This Isn’t Fraud, I’m Just Getting a Lower Premium
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and at https://zalma.com/blog plus more than 4150 posts.
Posted on March 29, 2022 by Barry Zalma
See the full video at https://rumble.com/vytsi0-true-crime-of-insurance-fraud-video-number-44.html?mref=6zof&mrefc=3 and at
Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim.
Insurance Premium Fraud
Insurance fraud is not limited to fake claims. Most people don’t present claims. The basic principle upon which insurance is based require the many to pay small amounts so that the few can collect. If the risk is not spread fairly among the many, all suffer.
Most businessmen would be shocked at a suggestion that they inflate a claim. They are honest in their business dealings. They honor their contracts and pay their bills. They seldom have insurance claims. When they have a claim, they deal fairly and honorably with their insurer.
Paying insurance premiums hurt. The marketplace is competitive. Prices vary from insurer to insurer. Skills vary from insurance broker to insurance broker.
Eventually, businessmen learn how insurers set their premiums. They know that rates are applied to modifiers like the square footage of the structure, the payroll, or the gross receipts of the business.
A businessman, sitting with his insurance broker, asks how he can get the lowest premium. He will often put his morality on hold when the broker suggests that he estimate a lower amount of gross earnings. The businessman will see nothing wrong with loping 10,000 square feet of his 50,000-square foot warehouse when applying for insurance. When called upon to list the payroll for his workers’ compensation policy, he will be unconcerned when he tells his broker the payroll is $200,000 less than it actually is. It is just good business sense to reduce your workers’ compensation premium. When his policy shows factory workers cost more to insure than clerical, he “accidentally” reports to his workers’ compensation insurer that ten percent of his employees are factory workers and ninety percent are clerical, although the opposite is true.
What the businessman does not know, and what his broker does not tell him, is that knowingly misrepresenting a material fact [and there is nothing more material to an insurer than the basis upon which the premiums are calculated] is fraud. Insurance fraud in the acquisition of insurance bears both civil and criminal penalties.
An insurance broker who aids or abets and insured in obtaining lower premiums based upon false information is equally guilty of fraud. The agent or broker who does not require the insured to sign an application will find, if the fraud is discovered, that the insured will deny knowledge of the application. He will merely say, “I trusted my broker. My records were obvious in my office. All he had to do was ask and I would have told him the truth.”
The broker, faced with such a situation, will find himself defending lawsuits brought by the insured and the insurer.
The California Insurance Code now requires the following warning on all claims documents presented to insureds by insurers:
FOR YOUR PROTECTION CALIFORNIA LAW REQUIRES THE FOLLOWING TO APPEAR ON THIS FORM
ANY PERSON WHO KNOWINGLY PRESENTS FALSE OR FRAUDULENT CLAIM FOR THE PAYMENT OF A LOSS IS GUILTY OF A CRIME AND MAY BE SUBJECT TO FINES AND CONFINEMENT IN STATE PRISON.
I believe, to protect the insured, the broker and the insurer, that the law should be modified to require the same warning on every application for insurance. A warning will not stop a person intent on committing fraud. It will, however, remind the honest businessman tempted to commit fraud to obtain a lower premium of the hazards of his actions.
Insurance fraud is not limited to fake claims. Most people don’t present claims. The basic principle upon which insurance is based require the many to pay small amounts so that the few can collect. If the risk is not spread fairly among the many, all suffer.
What the businessman does not know, and what his broker does not tell him, is that knowingly misrepresenting a material fact [and there is nothing more material to an insurer than the basis upon which the premiums are calculated] is fraud. Insurance fraud in the acquisition of insurance bears both civil and criminal penalties.
Every claim adjuster and investigator should review every word on the application and obtain the insured’s answers asked as if the adjuster has no knowledge of the answers on the application form or be criticized for not completing a thorough investigation.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and [email protected].
Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
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Write to Mr. Zalma at [email protected]; http://www.zalma.com; http://zalma.com/blog; I publish daily articles at https://zalma.substack.com, Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/
Anti-Public Adjuster Clause Is Effective in New York
Post number 5301
Read the full article at https://www.linkedin.com/pulse/public-adjusters-attempt-represent-insured-subject-zalma-esq-cfe-rubfc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Insurers May Contractually Prevent an Insured from Hiring a Public Adjuster
In Peter Barbato & North Jersey Public Adjusters Inc. v. Interstate Fire & Casualty Company, et al, No. 25-cv-5312 (JGK), United States District Court, S.D. New York (December 15, 2025) the plaintiffs, Peter Barbato and North Jersey Public Adjusters, Inc. (“NJPA”), filed suit against several insurance companies, including Interstate Fire & Casualty Company, Independent Specialty Insurance Company, and certain Underwriters at Lloyd’s of London.
FACTS
NJPA is a New Jersey-based public adjusting firm licensed in New York. The dispute centers on ...
Anti-Public Adjuster Clause Is Effective in New York
Post number 5301
Read the full article at https://www.linkedin.com/pulse/public-adjusters-attempt-represent-insured-subject-zalma-esq-cfe-rubfc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Insurers May Contractually Prevent an Insured from Hiring a Public Adjuster
In Peter Barbato & North Jersey Public Adjusters Inc. v. Interstate Fire & Casualty Company, et al, No. 25-cv-5312 (JGK), United States District Court, S.D. New York (December 15, 2025) the plaintiffs, Peter Barbato and North Jersey Public Adjusters, Inc. (“NJPA”), filed suit against several insurance companies, including Interstate Fire & Casualty Company, Independent Specialty Insurance Company, and certain Underwriters at Lloyd’s of London.
FACTS
NJPA is a New Jersey-based public adjusting firm licensed in New York. The dispute centers on ...
Proof of Highly Contaminated Water is Required for Extra Payments
Post number 5300
Read the full article at https://www.linkedin.com/pulse/acting-your-own-lawyer-foolish-barry-zalma-esq-cfe-mbg0c, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Acting as Your Own Lawyer is Foolish
Evidence of Breach of Contract Survives Dismissal of All Other Charges
In Lee Lifeng Hsu and Jane Yuchen Hsu v. State Farm Fire And Casualty Company, C. A. No. N24C-09-020 CLS, Superior Court of Delaware (February 27, 2026) a claim to State Farm who paid approximately $61,000 after assessments but denied coverage for additional items including ceramic tiles, the kitchen floor ceiling, underlayment plywood, and numerous personal property items resulted in suit by the Hsu’s acting in pro per.
Facts
Lee Lifeng Hsu and Jane Yuchen Hsu (“Plaintiffs”) purchased a homeowners’ insurance policy from State Farm Fire...
Insurance Condition Requires Following the Intent of the Parties
Post number 5307
Principles of Contract Interpretation Compels Reading Contract as Written
Read the full article at https://www.linkedin.com/pulse/portable-storage-containers-buildings-barry-zalma-esq-cfe-fkg1c and at https://zalma.com/blog.
In Eastside Floor Supplies, Ltd. v. SCS Agency, Inc., Hanover Insurance Company, et al., No. 2024-01501, Index No. 609883/19, 2026 NY Slip Op 01488, Supreme Court of New York, Second Department (March 18, 2026)
In May 2019, a fire damaged business personal property belonging to the plaintiffs, which was stored in portable storage containers at their Manhattan premises. At the time of the fire, the plaintiffs were insured under a businessowners insurance policy (BOP) issued by the defendant Hanover Insurance Company which provided general coverage for business personal property, and which included a specific extension for “Business Personal Property Temporarily in Portable Storage Units” (the portable storage ...
ERISA Saves Fraudulent Claims Suit
Post number 5306
Read the full article at https://www.linkedin.com/pulse/failure-provide-well-pled-facts-defeats-most-action-zalma-esq-cfe-b4zuc and at https://zalma.com/blog plus more than 5300 posts.
Allegations of Fraudulent Insurance Billing Must be Pleaded with Specificity
In Genesis Laboratory Management LLC v. United Healthcare Services, Inc. and Oxford Health Plans, Inc., No. 21cv12057 (EP) (JSA), United States District Court, D. New Jersey (March 13, 2026) Genesis Laboratory Management LLC (“Genesis”), a New Jersey-based molecular diagnostic and anatomic pathology laboratory, provided COVID-19 related testing services and submitted claims for reimbursement as an out-of-network provider to United Healthcare Services, Inc. (“United”) and Oxford Health Insurance, Inc. (“Oxford”). Metropolitan Healthcare Billing, LLC (“Metropolitan”), owned by the same individual as Genesis, handled the billing for Genesis.
FACTUAL BACKGROUND
United and Oxford, who administer both ERISA and ...
ERISA Saves Fraudulent Claims Suit
Post number 5306
Read the full article at https://www.linkedin.com/pulse/failure-provide-well-pled-facts-defeats-most-action-zalma-esq-cfe-b4zuc and at https://zalma.com/blog plus more than 5300 posts.
Allegations of Fraudulent Insurance Billing Must be Pleaded with Specificity
In Genesis Laboratory Management LLC v. United Healthcare Services, Inc. and Oxford Health Plans, Inc., No. 21cv12057 (EP) (JSA), United States District Court, D. New Jersey (March 13, 2026) Genesis Laboratory Management LLC (“Genesis”), a New Jersey-based molecular diagnostic and anatomic pathology laboratory, provided COVID-19 related testing services and submitted claims for reimbursement as an out-of-network provider to United Healthcare Services, Inc. (“United”) and Oxford Health Insurance, Inc. (“Oxford”). Metropolitan Healthcare Billing, LLC (“Metropolitan”), owned by the same individual as Genesis, handled the billing for Genesis.
FACTUAL BACKGROUND
United and Oxford, who administer both ERISA and ...