Which type of fraud involves exaggerating a claim?

Soft fraud, also known as opportunity fraud, occurs when an individual exaggerates a legitimate claim, thereby inflating the amount of the claim to receive a higher payout from the insurance company. This type of fraud is characterized by the fact that the individual is reporting a real event but is misrepresenting the extent or severity of the damages or losses involved.

This differentiates soft fraud from hard fraud, where individuals create false claims or stage events with the intent to deceive the insurer. In the context of the examination, recognizing soft fraud is crucial as it reflects a manipulation of the truth rather than a complete invention, making it sometimes more challenging for insurers and adjusters to identify.

Other terms listed in the options, such as an original occurrence and indirect loss, do not pertain to the concept of fraud but rather describe different aspects of insurance claims or loss types, thereby making them less relevant to the context of exaggerating a claim. Understanding the nuances between these fraud types is essential for adjusters, as it aids in proper investigation and evaluation of claims, ensuring fair practices and the integrity of the insurance process.