We normally think of insurance companies as helping us when we get into trouble. Sick? They can help with medical bills. In a car accident? They can help with repairs. But it turns out that some insurance companies are working to get their customers into trouble, rather than out of it.

Claims and Crimes

BuzzFeed highlighted the case of Harry Schmidt, a veteran who reported his truck stolen only to find himself charged with insurance fraud. His insurance company Erie, paid part of the salary of the lead detective who investigated Schmidt’s claim, and that of the prosecutor who filed charges against him. A judge ultimately found Schmidt not guilty, but not before he sold off many of his possessions to cover thousands of dollars in legal fees.

And rather than just call it a day, Erie then sued Schmidt in civil court for fraud. When discovery in that case revealed the insurer’s close ties to law enforcement and disproved expert witness testimony in his criminal trial, Erie finally settled with him for an undisclosed sum, without admitting it had done anything wrong.

And Schmidt is far from alone:

Sides of the Story

Insurance companies, on the other hand, contend that rooting out fraud is critical to keeping policy rates low, even if it means funding police and prosecutors, and referring criminal cases to them. Of course, it also saves those companies money in the long run – up to seven times the amount that such fraud protection measures cost, according to some estimates.

But at what expense to customers? Some of them may end up on the wrong end of insurance fraud accusations, even if their claim is perfectly legitimate. That’s why it’s always important to have an attorney on your side – and not one paid for by your insurance company. If an insurance company has refused to pay out your claim, or worse, if they accuse you of insurance fraud, contact an experienced insurance lawyer right away.

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