Zalma’s Insurance Fraud Letter – July 15, 2021


ZIFL – 7-15-2021

Three Types of Insurance Fraud

See the full copy of Zalma’s Insurance Fraud Letter at and see the full video at See the full video at and at 

Post-dating a Loss

This fraud technique involves a loss at a time when an individual has no or inadequate insurance. Following the loss, the individual applies for insurance or increases the limits of existing coverage. After a period of time (usually several days or weeks), a fraudulent claim is submitted for a loss reported to have happened after the new policy came into effect. Failure of the insurer, or its agent, to see the property (especially if the insurer has included the items on its schedules) before issuance of a policy is an invitation to this type of fraud. There is an unwritten exclusion in every insurance policy that requires that every covered loss must be fortuitous, that is, be the result of a contingent or unknown event. Attempting to post-date an auto loss is often difficult and if there is a police report, impossible.

Insurance policies typically come into effect at 12:01 a.m., standard time on the day the policy is purchased. If a person has an auto accident, fire or theft at 10:00 a.m. he may go to an insurance agent, purchase a policy that goes into effect at 12:01 a.m. that day, and make claim on the new policy.

Because the insurance fraud perpetrator will report that the loss occurred the day after the policy date, this type of scheme usually fails. When there is evidence that the insured knew about the incident before the policy was acquired or that there exists evidence when it actually happened, like a police or fire report, this type of fraud will fail.Paper Property

This sort of fraud involves property that never existed or was never owned by the insured. It can be the most difficult type of staged loss to defeat. Paper property can appear in a staged loss or in a legitimate claim, where paper property is used to inflate the claim amount. In the presentation of the claim, the insured produces a receipt (original or duplicate) or an appraisal. The document is either fraudulent (examples include the use of computers or even white-out paint and a photocopier to change the name of the owner) or represent the value of an item owned by another individual.

For example, an insured who purchased jewelry at a department store on a credit card, took the jewelry to an appraiser, returned the jewelry for full credit and then reported it stolen. The jewelry (no longer in her possession) was then insured by means of the appraisal and a loss was reported shortly thereafter. The receipt presented to the insurer was legitimate and if the receipt was not verified with the vendor the fact that it was returned and is still in inventory at the vendor will never be discovered.

In one of my cases my investigator went to the vendor to verify the sales receipt. It was verified and then the vendor asked the investigator: “would you like to see it?” He then pulled the item out of a showcase and provided the investigator with the receipt showing he refunded the insured the purchase price when it was returned.

Health Insurance Fraud

The nation’s bill for health care fraud is enormous ¾ as large as $300 billion or more every year. Fraud takes place at many points in the health care system, in hospitals, nursing homes, and diagnostic facilities, by doctors, attorneys, health care providers, durable equipment providers, and patients.

One large area prone to fraud is the Medicare system. This system processes more than 800 million claims a year with 70 different contractors handling the claims that come from hundreds of thousands of doctors, laboratories, and other health practitioners and facilities.

© 2021 – Barry Zalma 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 also serves as an arbitrator or mediator for insurance related disputes. 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 and Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the podcast Zalma On Insurance at;  Follow Mr. Zalma on Twitter at; Go to Barry Zalma videos at at; Go to Barry Zalma on YouTube-; Go to the Insurance Claims Library – Read posts from Barry Zalma at; and the last two issues of ZIFL at  podcast now available at

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