Soft fraud typically involves what type of action by an insured?

Soft fraud typically involves actions that may not be overtly dishonest but still exaggerate the true nature of a claim. In the case of soft fraud, an insured often overstates a claim without any malicious intent, which means they might embellish the details or value of the loss to receive a larger payout from their insurance provider.

In insurance terminology, this distinction is important. While hard fraud involves clear deception, such as fabricating a claim or staging an incident, soft fraud relates more to exaggeration or misrepresentation that is not intended to be seriously deceptive. The insured might genuinely believe that the extent of the loss justifies a higher claim, even if it veers away from the actual facts.

This understanding highlights the challenges insurers face in differentiating between genuine claims and those that may be inflated. By recognizing soft fraud as a serious yet different category of fraud, it encourages better practices in claim reporting and underscores the importance of accurate record-keeping and reporting.