What is insurance fraud?
Insurance fraud is a type of consumer fraud that involves an individual or business intentionally making false or deceptive statements to an insurance company in order to gain an economic benefit. In California, insurance fraud is a crime and is punishable by severe criminal or civil penalties. Insurance fraud can take many forms. One type of fraud involves submitting false information to an insurance company when submitting a claim in order to receive more money from the insurance company than the policyholder is legitimately owed. For example, a policyholder may exaggerate the amount of damage done to their property in order to obtain a larger payout from the insurer. Another form of insurance fraud is known as "staged accidents," where a group of people conspires to commit fraud by staging an accident and then submitting false information to the insurance company in order to receive a payout. In addition, individuals or businesses may commit fraud with the sole purpose of avoiding having to pay insurance premiums. This is known as premium fraud, and involves deliberately misreporting information in order to obtain a lower premium rate than what is legally required. Insurance fraud is a serious crime, and California has strict laws in place to punish those who commit fraud. If caught, a person can face criminal or civil penalties, and be liable for repayment of any funds defrauded from the insurance company.
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