By MIKE WILLIAMS

False, set-up, and exaggerated or inflated insurance claims literally cost billions of dollars each year.

Billions in costs, passed on to those buying insurance. Claims costs are the primary factor driving insurance rates.

Where do claims come from? To a large degree, they come from us – we the people.

We certainly cannot control acts of nature and many of the circumstances that bring about claims, but we can control our honesty, and statements about a loss when reporting that claim to our insurer.

The purpose of insurance is to provide or help with recovery from unexpected , accidental, or unplanned events that cause loss, damage or injury. However, when someone overstates the amount of damage or injury to make money from an insurance claim, everyone is hurt.

According to a survey released by the Insurance Research Council (IRC) in 1999, an increasing number of Americans believe insurance claim “padding” is acceptable.

More than one in three, 36 percent, said it is all right to overstate an insurance claim to make up for premiums paid in previous years. Alarmingly, only 19 percent held this view in 1993.

Similarly, 40 percent said “it was OK” to pad a claim to compensate for paying a collision deductible, compared to 22 percent in 1993.

Younger respondents were significantly more tolerant of cheating their insurer.

The study found 63 percent of those 18-24 years agreed it was all right to pad claims to cover past premiums.

It has been estimated that all insurance fraud put together costs insurance companies more than $20 billion a year. We all pay the price for this dishonesty in the form of higher premiums.

Not only is “honesty the best policy.”

It is also the most favorable economically.

MIKE WILLIAMS is a State Farm insurance agent with an office in LaPlace.