Insurance fraud involves bad faith on the part of a policy holder, or at times an issuer of policies. When the case involves the policy holder, the claim is usually that the person faked injury or damages, or caused his or her own damage not covered by a policy, then attempted to collect from the provider. When the case alleges insurance fraud by the provider, it is usually based on a pattern where the company systematically refuses to pay benefits to a large number of people for similar types of claims. Often, this can become a class action lawsuit.

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