Simon Read: Can you really afford to take the risk when it comes to insurance fraud?

Watch out – insurance companies are set to look a little more closely at claims in the coming months as part of a crackdown on fraud. The Association of British Insurers reported this week that the number of fraudulent claims has soared 30 per cent in the last two years to £730m a year. On top of that it estimates another £1.9bn-worth of fraudulent claims has gone undetected.

The dodgy claims add an extra £44 to every household's general insurance costs every year, the ABI says. The figures have prompted one insurer to boost its fraud investigation team by a third. Esure says it will be training up new recruits in specialist detection techniques such as cognitive interviewing – designed to reveal tell-tale inaccuracies and inconsistencies in fabricated stories.

Nick Starling, director of general insurance at the ABI, warns: "There is no hiding place for insurance cheats. Honest customers should not have to pay for the fraudsters. The tough approach taken by insurers to protect honest customers means they are detecting more of the fraud committed. Closer scrutiny of proposal forms and claims, as well the exchange of information through industry-wide databases, is tightening the net on the cheats."

The cheats, in many instances, are simply folk who are trying to reduce the cost of their cover. By not telling the whole story it's possible to cut the cost of a policy considerably. But is this really cheating, or just a case of people being forced by rising costs to tell a few white lies to be able to afford the insurance?

Look at it this way. If you don't tell an insurer about all relevant facts relating to your policy and the company finds out, then that would invalidate the policy. In other words it would make it worthless. So being tempted to bend the truth a little to cut costs means running the risk of wasting your money altogether.

I don't think that's worth the risk. Sure, insurance can be expensive, but you're paying for peace of mind and, with that, you need certainty. If my home burnt down, for instance, I would want to know for certain that my insurance policy would pay out to replace it. Without that assurance, the premiums are a complete waste of cash.

According to ABI research, 44 per cent of people think it is "acceptable" or "borderline" behaviour to increase the value of an item when claiming. Three in 10 feel the same way about overstating the extent of any damage being claimed for.

But many people prove to be pretty foolish when doing so. The ABI reports that one man recently claimed for DVDs that had not yet been released in the UK. On another occasion, a woman claimed for the theft of a campervan – even though records showed it had actually been written off ten years previously.

I can understand the temptation to inflate insurance claims, but trying to swindle an insurance company out of extra cash seems a foolhardy idea, especially as you could be prosecuted and end up with a criminal record. That's something that's not worth taking the risk for.