What is the term for exaggerating a legitimate claim for profit?

The term that refers to exaggerating a legitimate claim for profit is known as soft fraud. This concept involves taking a real event—such as a loss or damage—and inflating the details or the value of the claim in order to secure a larger payout from the insurance company. It's important because it reflects a deceptive practice that undermines the integrity of the insurance system while still being rooted in a legitimate claim.

In contrast, hard fraud generally refers to outright fabricating a claim or creating a false scenario for monetary gain, which goes beyond exaggeration. Insurance fraud encompasses a broader range of activities, including both hard and soft fraud, making it a less specific term. False representation is a legal term that can apply to various types of deceit, but it doesn't specifically capture the nuance of exaggerating a legitimate claim. Understanding the distinction between soft fraud and these other terms is crucial for recognizing the different forms of misrepresentation in the insurance industry.