This is completely illegal and something that the Police are actively against.

It often happens like this...

The person loses their phone or drops in it water...

They then go to their phone insurance policy Terms and realise that they are not covered for loss or theft...

They realise they are covered for theft (pretty much every phone insurance policy covers theft).

So they say their phone was stolen.

This is totally illegal and could well land them with a massive fine if not a jail sentence.

This is why you wnat to make sure your phone insurance does have loss and water damage and anything else that you think is important to you as part of your phone insurance