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Insurance is a method of sharing the risk of loss between a large number of people. When someone suffers a loss, they are reimbursed by their insurance, paid for from the premiums of all the insureds who didn't suffer a loss. While it may seem that the lossee has "hit the jackpot" in that they're the only one who have got more out of their insurance than they put in, the principal of indemnity dictates that they are reimbursed only the value of their loss. Ideally, insurance pays to get you exactly back where you started, no more, no less.
Of course, people looking for a quick buck have tried all kinds of schemes to try and make a profit off insurance. A number of different techniques include:
- Falsifying a loss, such as faking a burglary, hiding the "stolen goods" and then claiming their value from insurance.
- Deliberately causing a loss, such as burning down an old building to claim the money needed to build a new one
- Exaggerating the scale of a loss, such as claiming the worthless old paintings lost in a fire were actually valuable artworks. In particular, claiming exaggerated injuries from an accident (which is known as Flopsy when it has also been deliberately caused) either to claim on the insurance or to sue the person allegedly responsible
- Waiting until you incur a loss before buying insurance, then claiming that the loss took place during the policy period
- Lying about details which would prevent you from filing a claim, eg. who was driving the car or where the loss took place.
- Outright murdering a relative with life insurance.
- Killing yourself but making it look like an accident or murder to secure the money for your family. Or faking your death for the same purpose.
- Combinations of these, e.g. someone files a claim for workers' compensation, and (1) aren't injured (a complete scam) (2) are not injured enough to be unable to work, e.g. if you get a paper cut it means you get a bandage and maybe a tetanus shot, it does not mean you can't use your hand; (overclaiming) (3) if you were injured but you stay off work long after actually healing (malingering).
A common plot involves characters attempting to pull off an insurance fraud and either succeeding or having to deal with the consequences of being found out. Alternatively, the insurance company may be depicted as doing its best to prove a claim false, even going so far as to plant evidence, in order to void the policy.
- Gunslinger Girl has an example, where Angelica is almost murdered for the insurance money.
- The name of the The Simpsons episode below refers to the movie Double Indemnity, about a woman plotting to kill her husband to claim the life insurance.
- The Postman Always Rings Twice also had this as a plot element. Both films were based on novels by James M. Cain.
- At the end of Free Willy, the bad guys decide to kill Willy for the insurance money. The good guys have other ideas and do what it says in the title.
- The comedy movie Short Time revolves around a cop who gets some medical test results mixed up and is told he has a terminal illness. Since he wants his family to have enough money (his greatest dream is that his son gets to go to Harvard), he looks over his policeman's insurance policy...and discovers it only covers "professional damage" (i.e. being killed in the line of duty). And he's only 3 days away from retirement. Hilarity Ensues.
- A guy in In the Mouth of Madness burns down his warehouse of fur coats, but it turns out just stashed them away, and gave one to his wife... and another to his mistress. Catching both those ladies in their coats gave the guy away.
- The '70s drama Save the Tiger stars Jack Lemmon as a garment-company executive who's heavily in debt and struggling with himself over whether to have his warehouse torched. He ultimately decides to go ahead with it.
- In Stop or My Mom Will Shoot, the plot is that a company received insurance for a fire in a weapons warehouse. Turned out they took the wares away first.
- Fletch deals with this in the "plan your own murder so your wife gets the benefits" variety. Of course, it's really to kill Fletch, who has been digging too close to the drugs on the beach story, that Stanwyck is involved in.
- Urban Legend: A guy insures his cigars, smokes them, then tries to claim the insurance money for "destruction in a fire".
- Usually the judge rules in the guy's favor, but in some versions the insurance company has him arrested for arson.
- Raising the question of why a judge would order an insurance company to pay out, knowing that policies explicitly don't cover the owner's intentional destruction of the property.
- This turns up in an Italian Uncle Scrooge story. Rockerduck insures a box of Havana cigars for a ridiculous sum against fire. However, Scrooge notes that the insurance deal directly says that if the fire is deliberate there will be no payout. He is still worried when Rockerduck stores the cigars in a place that is a horrible firetrap. Donald Duck points out that the cigars aren't insured against theft - not realising that this will, of course, make Scrooge force him to steal them. While trying to do so, Donald succeeds in starting a fire...
- Brad Paisley has The Cigar Song which also tells this story. The insurance pays the claim, but at the end there is an investigation which results in the smoker being thrown in jail for "24 separate counts of arson."
- In the Discworld novel The Colour of Magic, no sooner has the concept of inn-sewer-ants been introduced to Ankh-Morpork than the cynical locals hit upon insurance fraud via arson.
- Partly because it's explained as being "like a bet that the Broken Drum won't get burned down"...
- And partly because the guy selling the insurance thought the Broken Drum was worth 200 solid gold coins.
- If this even needs clarifying - 200 gold coins is enough to buy half a city, but a Funny Foreigner selling the insurance isn't aware of that.
- Arthur Hailey's novel Airport, and the subsequent film adaptation, feature a subplot about a failed businessman who takes out a large flight-insurance policy and plans to blow up the plane with himself on it, so his wife can collect.
- The same thing happens in Airplane! 2, but he bought car insurance by mistake
- A variant was committed by the captain of the Vociferous Carmichael in On Stranger Tides by Tim Powers. He didn't cheat his insurance company directly; rather, he charged the owners of his ship's cargo a fat fee to be used to insure its safe delivery, but pocketed their money instead of buying the promised insurance.
- In one of the All Creatures Great and Small books, the narrator tells about some brothers and father who got slick talked into disability insurance. However, the joke was on the insurance company as they "managed" to somehow get injured repeatedly at an amazing rate as soon as the policy was issued. They remarked how it was strange how the company dropped them as soon as the policy term ran out but that they got another company, albeit at a higher premium, to insure them. Note that they were actually really injured, it's just implied that they injured themselves for the money.
- Another story talks about animals supposedly killed by lightning (the farmers tended to blame it in case of sudden death). There are usually few signs, unless there are scorch marks. Siegfried inspects one case, and tells the farmer it's a textbook case of the scorch marks... except for the candle-wax dripped. The farmer is too upset to argue.
- In Zodiac, eco-activist Hank Boone is legendary for sinking whaling ships. In reality, he only ever sunk one in person -- all the rest were sunk by their owners to collect on the insurance and blamed on him.
- The Turning Tide features a businessman who passes data about convoys to the enemy, and then makes sure his own ships on the convoys are not carrying nearly as many goods as they are supposed to.
- Ant and Dec, in a Bill And Ben The Flowerpot Men pastiche on SM:TVLive, attempt to commit insurance fraud, but it is rumbled.
- The 1970s detective series Banacek (George Peppard) dealt exclusively with insurance fraud.
- Several episodes of CSI have this sort of thing as the ultimate motivation for deaths the team investigate. It's almost always played for tragedy, since the CSIs uncovering the true nature of the situations almost always means that someone made the ultimate sacrifice for nothing.
- In one episode a man suffering financial difficulties fakes his suicide to look like a hunting accident so that his wife will still receive his life insurance.
- Another episode had an old woman crash her car in an attempt to have her son get the insurance money.
- Another man lost his mentally handicapped ward's savings in a casino and tried to fake getting stabbed in the back.
- The fourth-season episode "Suckers," for a change, features an insurance fraud scam which does not involve a suicide, or any dead bodies at all: a casino hosts a (completely fraudulent) exhibit of Japanese artifacts as a cover for an equally staged robbery. It would probably have gone off flawlessly if the casino's owner hadn't had the actors he hired to put on the faux "exhibit" leave behind a bunch of paper money bands as "proof" that they'd stolen ten million dollars in cash.
- In the Doctor Who episode "The End of the World", Cassandra intends to destroy the space station so she can claim everyone's insurance money.
- On Leverage this is used fairly often as a means of taking down their opponents, due to Nate's role as a former insurance investigator. The team frequently causes their opponents to be arrested for insurance fraud or otherwise inconvenienced by it.
- In a first season episode Sterling, a current insurance investigator, benefited from avoiding payout on a several million dollar settlement when Nate and the team set up the villain for insurance fraud by selling him his own horse for several million dollars.
- In a fourth season episode, the team causes a corrupt cash for gold business to be arrested for insurance fraud after using a drill that the business owners bought as part of a decoy con to be used against them in a heist of their gold.
- One Are You Being Served episode has Grace Brothers under threat of hostile takeover. When the staff meet to discuss possible responses, the first one on Young Mr. Grace's list is "Burn the building down and rebuild elsewhere with the insurance money". Captain Peacock protests this, to which Young Mr. Grace notes in confusion, "Well, it worked in 1918..."
- An episode of Tales from the Crypt involved an abusive man pressuring his wife and brother into helping him fake his death to collect his life insurance. Since his brother was a morgue worker, he could set up a fake crime scene, fake his death, collect the money, go to South America, get plastic surgery, etc. Naturally, this being Tales From the Crypt, it backfired horribly.
- This occurs several times in The Rockford Files, most notably in one episode where a man fakes his own death and splits the insurance money with his wife before they go their separate ways.
- Married... with Children: Al believes the Dodge was stolen, so he claims, among other things, that he had the Mona Lisa and a Stradivarius violin in the car. While Peggy is on the phone with the adjustor, she admits she has previously filed incorrect claims before, but it was with another insurer.
- The Wicked Stepmother in the Korean Drama Shining Inheritance tricks her stepdaughter into signing away her rights to her father's life insurance policy. She also hides the fact from everyone that her husband isn't dead.
- How to Make It in America has Rene trying this with the Rasta Monsta truck.
- The Curse of Monkey Island includes a sequence where the main character has to fake his own death (right down to passing out and being buried in a crypt), just so he could inconspicuously come back to life, collect his death certificate, and present it to his life insurance provider to cash in his policy. Amusingly enough, his insurance provider barely even bats an eye at the idea of him coming back from the dead to collect his insurance. He does at least decide to stop selling him life insurance.
- Insurance fraud is a side mission in the Saints Row games, wherein the player character throws himself into traffic to take ludicrous bumps that show off the physics engine and rack up cash.
- One of the last quests in the Goblin starting zone in World of Warcraft has the player burn down their house to collect the insurance money (the island's about to go sky-high anyway).
- In The Simpsons:
- After the house burns down in "Homer The Heretic," Homer tries to exaggerate the value of the loss:
Insurance agent: Any valuables in the house?
Homer: Well, the Picasso, my collection of classic cars...
Insurance agent: Sorry, this policy only covers actual losses, not made-up stuff.
Homer: [miffed] Well that's just great!
- In "The Joy of Sect," Reverend Lovejoy is seen spreading petrol over the floor of his church after everyone converts to Movementarianism. "I never thought I'd have to do this again."
- In "Dumbbell Indemnity," Moe gets Homer to destroy his car and make it look like an accident so he can use the insurance money to fund his extravagant treatment of his new girlfriend. However, Homer is caught and jailed, so Moe decides to burn down the bar to fake his death after confessing to the fraud. He doesn't go ahead with this plan but ends up burning down his uninsured bar by accident.
- In another episode, Moe attempts this after Marge gets involved in a bar fight. Moe sets fire to the bar and Lenny points out that he needs to have insurance to get the money.
- One early episode had Krusty going bankrupt and faking his death to avoid his debt. Once Bart and Lisa discover his new life and talked him into coming back to being Krusty, he then faked the death of his fake identity commenting that it was insured for quite a lot of money.
- A milder example, Homer is talking to an insurance agent after crashing his car:
Insurance agent: Just one more question, this establishment, "Moe's" you were at, what type of place is it?
Homer's brain: Uh oh, you can't let him know you were drinking. But what else is open at that time of night?
Homer: It's a pornography store. I was buying pornography.
Homer's brain: Beautiful, I would never have thought of that!
- Homer once used his company health insurance to buy Dimoxinil, a drug not covered (because it's used solely for cosmetic reasons, to regrow hair), by saying it's for something more serious. When Mr. Burns finds out what Dimoxinil really is, he yells at Homer, and just when it looks like Homer might get fired and/or sued, Mr. Burns says that he'll let the incident go, because he suffered early-onset male-pattern-baldness, and knows what it's like to be bald.
- Happened in Family Guy when the Drunken Clam was sold to a British guy and then mysteriously burned down. The arsonist even frames Peter for this act. Lois even meets the insurance agent after he paid off the policy.
Agent: The owner even bought a huge insurance policy the day before the fire.
Lois: Doesn't that seem suspicious to you?
Agent: Not really. In fact it seems to happen all the time. <brief pause. walks off>
- Played for laughs more later when the agent learns about the plot, apparently having never heard of the crime before.
Agent: This is a textbook example of insurance <checks dictionary> ... frowd?
- Played seriously when Mort is in financial trouble with his pharmacy. He, Peter and Quagmire burn down the pharmacy to collect a large settlement. They spend the rest of the plot feeling guilty and with Joe investigating the cause.
- An episode of Batman: The Animated Series has a developer build a casino called "Joker's Wild," using the Joker's face, costume and color scheme all over the place. The developer claims that the Joker is a universal symbol of gaming, not just one madman's motif. Joker sees the press conference on TV and promptly breaks out of Arkham in order to get his revenge for what he sees as an insult. It turns out the Joker theme was put in midway through planning because the project was over-budget and the developer was in danger of bankruptcy. He actually wanted to provoke the Joker into destroying the place so he would get the insurance money. Guess what? Turns out that it's a bad idea to deliberately provoke a homicidal maniac.
- Back around the time of the second Punic War, the Roman government decided to basically insure ships carrying supplies to legions overseas. Two businessmen deliberately sank rotting ships filled with worthless cargoes, then exaggerated their losses. Upon attempting to use violence to escape a trial before the people, capital charges were substituted for the original fine and quite a number of people wound up exiled.
- In real life, a man used an unsolicited ad to obtain life insurance on his gold fish. He was absolutely truthful on the application (e.g. weight: 1/2 ounce). The policy was issued and when the goldfish died he submitted a claim. When it went to court, the judge ruled in his favor saying that the insurance company could have read the application and figured out it wasn't a person, but they issued the policy, so they have to pay.
- Belle Gunness, a serial killer who started out by burning down houses and killing people with life insurance policies - such as her husband and children. She was not very subtle, for example killing her first husband on the one day his two life insurance policies overlapped, but escaped legal attention despite the accusations of the man's relatives. Later she simply attracted suitors with money and murdered them.
- There as also at least one woman who poisoned a number of friends and relatives for insurance money (on policies they didn't know she'd taken out on them). She got caught when she reacted much more emotionally to a death she HADN'T caused and police finally became suspicious. Cases like this are the reason why you can't take out life insurance on an adult without documentation that they know about it.