What is Insurance Fraud?
What is Insurance Fraud?
Insurance fraud usually refers to the use of false, misleading, or fraudulent information in an insurance document. This usually includes violations wherein an insured person or company makes fake or exaggerated statements. For example, insurance fraud may be found where an applicant falsifies their income in order to obtain lower insurance rates.
Insurance fraud can also occur in connection with various personal injuries, especially automobile accidents, slip and fall claims, and product liability claims. Fraudulent insurance applications or forms are often common in other settings such as medical malpractice claims or work injury claims. In short, anytime insurance policies are a factor, there is a possibility that fraud can occur.
What are the Legal Penalties for Insurance Fraud?
Insurance fraud is often classified a white collar crime, meaning that the offense is of a non-violent nature. White collar crimes are generally punishable by a criminal fine and/or jail time of up to one year. Repeat instances of insurance fraud can be punishable by stricter legal consequences.
In addition, insurance fraud can also lead to civil liability in addition to criminal consequences. For example, the insurance company may decide to sue the other party in order to recover any damages caused by the fraud.
Can Insurance Fraud be Committed by Insurance Companies?
In most cases, the term “Insurance Fraud” refers to fraud committed against the insurance company by the insured party. However, in some cases, “insurance fraud” can also include fraud that is committed by an insurance company against the customer.
For example, an insurance company can commit insurance fraud through acts such as:
- Selling fake or bogus insurance coverage packages (especially common among the elderly)
- Failing to pay out insurance premiums to the insured, especially when it involves some sort of deception or misrepresentation as to the premium packages
- Providing false or deceptive information in connection with a lawsuit
Insurance fraud that is committed by an insurance company can often lead to serious legal penalties. This is because other laws may be at play, such as business tax laws, or ethical rules for businesses.
Do I Need to Hire a Lawyer if I Have Legal Issues Involving Insurance Fraud?
Insurance fraud claims can often present many legal challenges, for both the consumer as well as the insurance company. If you’re facing any legal issues or disputes that involve insurance fraud, you may wish to contact a lawyer immediately. Insurance fraud is punishable by criminal penalties, and can have many other legal consequences as well. An experienced attorney can help represent you in court during a lawsuit, and can also explain how the fraud laws in your area might affect you.
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Last Modified: 09-13-2012 12:33 PM PDT
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