What action may an insurer take if fraud is discovered during the claims process?

When an insurer discovers fraud during the claims process, one of the primary actions they can take is to deny the claim and potentially cancel the policy. This is because insurance policies typically include a provision that voids coverage in the event of fraudulent behavior. Fraud undermines the fundamental trust in the insurance relationship, where accurate and honest reporting is crucial for risk assessment and premium calculations.

By denying the claim, the insurer protects itself from having to pay out on what they determine to be a fraudulent claim. Furthermore, canceling the policy serves to disengage from a policyholder who has violated the terms of the insurance contract. Insurers aim to maintain integrity and fairness in the claims process; thus, they have the right to take such serious actions when fraud is detected.