What is soft fraud characterized by?

Soft fraud is characterized by the act of overstating the severity of a legitimate claim. This type of fraud involves individuals who may have indeed experienced an actual loss or damage but choose to exaggerate the details in order to gain a larger financial compensation or benefit from their insurance policy. For example, a person might modestly injure themselves in a car accident but then claim more significant pain or disability than is warranted, thus inflating their claim.

This distinction is key because, unlike hard fraud, where a claimant invents an entirely false event or situation to create a claim (as seen in cases where events are completely fabricated), soft fraud still revolves around an actual incident but involves dishonesty about the extent of the damage or loss. It represents a more subtle, yet still illegal, manipulation of the claim process. The nuance of soft fraud highlights the ethical challenges and complexities involved in insurance claims, underscoring the importance of accurate and honest reporting from claimants.