What constitutes insurance fraud?

Insurance fraud is defined as any act of deception intended to result in an unauthorized benefit. The correct answer involves knowingly misappropriating insurance premiums, which means intentionally taking money intended for insurance premiums without the rightful intent of providing coverage. This fraudulent act undermines the integrity of the insurance system and can lead to severe consequences, including criminal charges and financial penalties.

Other factors like submitting claims after a policy has lapsed or making honest mistakes do not qualify as fraud if there is no intent to deceive. Similarly, using accurate financial information is not fraudulent, as it reflects true circumstances without deceitful intent.