Insurers have warned of harsh consequences for the rising number of people making false or exaggerated claims.

Thousands of policyholders have made fake claims in an attempt to generate money to cover the cost of living crisis Insurer LV has reported a vast surge in fraudulent claims, which it has put down to financial pressures driving ordinary people to extreme methods of supplementing their incomes.

It said fake claims more than doubled in the last three months of 2021, as rising inflation, energy bills and looming tax rises sparked widespread financial worries.

So-called “pre-inception losses” – where someone loses or damages an uninsured item but then takes out a policy and lies about the date the loss happened – were up 156pc on the previous quarter, it said. Exaggerated claims, where a genuine accident occurs but details are overstated, rose 138pc, while outright fabricated claims increased 81pc, it said.

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The bogus claims included someone attempting to get a payout for the cost of a lost Omega watch, saying they had dropped it down the lavatory of a local pub, despite CCTV proving otherwise. Another person falsified the date on which they smashed their 50" television in order to benefit from recently purchased insurance, while another lied when claiming for a stolen bicycle, claiming it was locked up when it was not.

LV’s Matt Crabtree said the rise was down to growing financial pressures on households.

“Sadly this is leading to an increase in...

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