What is "fraud, soft" in relation to insurance claims?

• A. Faking accidents
• B. Negligently causing damages
• C. Inflating claims for higher indemnification
• D. Misreporting thefts

Answer: (C)

The term "fraud, soft" refers specifically to the act of inflating claims for higher indemnification. This practice involves exaggerating the value of a loss or damage to receive a larger payout from an insurance company. Soft fraud can include tactics such as overstating the extent of damages or including fictitious items in a claim. Insurers take soft fraud seriously because it can lead to inflated premiums for all policyholders when losses become excessive.

This distinction is crucial in the realm of insurance because it highlights how fraudulent behavior can subtly seep into claims processes without being outright deception, as seen in more overt forms of fraud. Understanding this term helps in identifying and addressing the impact of such practices on the overall integrity of the insurance system.