Final answer:
Deliberately causing or faking a loss for insurance claims is fraud, and exaggerating a legitimate loss is soft fraud. Both practices are illegal and unethical, and the rationalization that 'nobody got hurt' does not justify them.
Step-by-step explanation:
Deliberately causing or faking a loss in order to file an insurance claim is called fraud, while exaggerating or inflating a legitimate loss in order to increase the indemnification is called soft fraud or opportunistic fraud.
This unethical and illegal behavior is not justified by the rationalization of 'The Denial of Injury,' where an individual downplays their actions by arguing that no one was directly harmed and insurance will cover the losses.
However, such practices contribute to higher premiums and can harm the integrity of the insurance system.