Insurance Fraud Awareness Practice Test 2025 - Free Insurance Fraud Practice Questions and Study Guide

Reporting to authorities and gathering documentation is the appropriate course of action after suspecting fraud because it helps ensure that the situation is handled properly and legally. When fraud is suspected, it’s critical to document any relevant details—such as dates, interactions, and specific red flags—since these pieces of evidence can support an investigation.

Involving authorities facilitates a formal investigation, which may lead to the identification and prosecution of fraudulent activities. Additionally, reporting the fraud can help protect others from becoming victims. Collecting documentation prior to reporting can provide a robust case to the authorities and assist in any further legal processes.

The other options do not adequately address the necessary steps to effectively manage suspected fraud. Ignoring the situation can lead to further losses and allow fraudulent activities to continue unchecked. Filing a new claim is not appropriate without addressing the suspicion of fraud, as it may compound the issue rather than resolve it. While consulting a legal advisor can be beneficial, it should not be the only step taken, as reporting to authorities is essential for uncovering and addressing the fraud effectively.