What is insurance fraud?

Insurance fraud is defined as the act of deceiving an insurer to obtain an undeserved benefit, such as financial gain through dishonest means. This may involve falsifying information, exaggerating claims, or staging events to make a fraudulent claim seem legitimate. This behavior undermines the integrity of the insurance system, leading to higher costs for honest policyholders, as insurers must account for losses incurred due to fraud.

The other options do not accurately capture the essence of insurance fraud. The second choice refers to legal tools meant to support and enforce valid insurance contracts, which is contrary to the concept of fraud. The third option discusses government regulation on premium pricing, which relates to regulatory oversight rather than fraudulent actions. The fourth choice describes a legitimate claims process, which is fundamentally different from fraud, as it involves rightful claims based on genuine losses and damages.