Some people think that auto insurance fraud is a quick way to profit from an accident. By defrauding their insurance company about an accident or injury that never happened, criminals are costing insurance agencies billions of dollars each year in the United States. Because of this, new penalties and criminal charges are being enforced more strictly to counteract this criminal behavior.
What is Considered Insurance Fraud?
Auto insurance fraud happens when people file fraudulent claims with their insurance company in order to profit financially. This can happen when someone over-exaggerates injury or damage in a wreck or something even more serious like staging a fake auto break-in or theft or planning an accident in order to get insurance money to replace parts on your vehicle.
What are the Different Types of Insurance Fraud?
There are different types of insurance fraud that can occur. The first is soft insurance fraud. Soft fraud includes minor offenses, things like opportunistic over-exaggerating or taking advantage of a person or situation. This is most common in situations where medical trauma or problems are faked or made to seem worse than they are. This is the most common type of insurance fraud because it is the easiest to fake or exaggerate injuries when the damage is subjective.
The second most common type of insurance fraud is hard fraud. Hard fraud is more serious criminal activity when malicious intent and planning of illegal activity are usually involved. This type of fraud includes things like faking or planning a car accident or a break-in, or some other major loss situation that turns out to be no real loss at all. Hard fraud is less common because it is clearly illegal and has major legal consequences.
There are different laws in different states with regard to insurance fraud and penalties. Because of this, fines and criminal convictions vary depending on where you live. Penalties include a misdemeanor or felony charges and penalties can include fines or jail time.
The vast majority of auto insurance fraud convictions are criminal misdemeanors which result from soft fraud being committed. Soft fraud is exaggeration and is sometimes committed without malicious intent. It is classified as fraud and as a misdemeanor nonetheless because it involves lying to an insurance company about the state or nature of the injury or accident in order to receive a bigger payout.
A misdemeanor conviction for this type of car insurance fraud can result in a fine, probation or even a jail term in extreme cases, although this will never be for more than 5 years. The fine will vary, depending on the seriousness of the offense, but with a misdemeanor it won\’t go above $15,000.
In recent years insurance companies have stepped up efforts to investigate fraudulent insurance claims. Companies now have specialized teams of insurance fraud investigators with law enforcement backgrounds that can resolve fraud issues much more quickly than before. This has lead to a significant decrease of payouts from fraud claims.
About the Author – Leigh Jackson has been writing for the Texas auto insurance and business industry since 2010. Jackson specializes in tips and strategies for online auto insurance and getting affordable auto insurance rates.
Auto Insurance Fraud Types Penalties
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