What is insurance fraud?

On Behalf of | Sep 24, 2021 | Firm News |

Fooling an insurance company seems like a plan for those looking for a way to collect money. Those who commit insurance fraud might find themselves facing charges in a California criminal court, learning their actions constitute felonies. Insurance fraud takes many forms, and insurance companies may identify a scheme as it unfolds.

Types of insurance fraud

People make mistakes, but that doesn’t mean they are guilty of criminal insurance fraud. Those trying to defraud an insurance company knowingly intend to defraud an insurance company and then perform a specific action to carry out the plan. For example, someone might purposely total a car for the money, claiming it was stolen and wrecked. A less involved auto insurance scheme could involve an auto body shop falsifying the damage reports and inflating repair costs.

Similarly, a medical professional could attempt to defraud insurance companies. Billing for medical care that never occurred would be one way to cheat the insurance providers. Performing unnecessary procedures would be another.

People injured at work may exaggerate injuries or outright lie to collect workers’ compensation or disability payments. Homeowners might falsely claim weather-related damages to procure compensation for home repairs. Such actions could lead to criminal complaints.

Insurance fraud and its consequences

Insurance fraud costs providers significant sums of money in payments each year. Those payments often lead to higher insurance premiums and other costs. So, even those not involved with the scheme may suffer.

Not everyone accused of insurance fraud did anything wrong, though. Investigators might look at honest mistakes and assume there was intent to commit fraud. Overestimating losses doesn’t always happen by design. Some people may rely on wrong information, resulting in an inflated insurance claim. Unfortunately, proving innocence may require going to court.