What term refers to increasing the indemnity by exaggerating a claim?

The term that refers to increasing the indemnity by exaggerating a claim is known as soft fraud. Soft fraud, often considered less severe than hard fraud, involves the exaggeration of facts or the inclusion of details that are not entirely true in an insurance claim. This can involve embellishing the circumstances of loss or damage to seek a higher payout. Such actions can still lead to significant consequences for both the claimant and insurance companies, as they undermine the integrity of the claims process.

In contrast, hard fraud involves more serious criminal actions, such as staging an accident or intentionally causing damage to secure an insurance payment. Legal fraud typically refers to activities or actions conducted within the legal system that mislead or take advantage of legal loopholes, while operational fraud usually pertains to internal company practices that are deceptive, often affecting financial reporting or business operations. Understanding these distinctions is crucial for anyone involved in the insurance industry, as it highlights the various ways in which fraud can manifest and the ethical implications of such actions.