The Ins & Outs Of Insurance Fraud In California

The Ins & Outs Of Insurance Fraud In California

The Ins & Outs Of Insurance Fraud In California

Fraud is the word used when a person says something they know to be untrue for the specific reason of obtaining some sort of benefit. One of the most common form of fraud in California is insurance fraud.

There are Multiple Types of Insurance Fraud

The State of California has authorized prosecutors to handle cases of insurance fraud that fall under the provisions laid out in Chapter 12 of the California Insurance Code. The code is commonly called the Insurance Fraud Prevention Act. When insurance fraud is suspected, the Fraud Division mounts an extensive investigation that explores whether the fraud actually occurred and if the accused is in violation of California’s Penal and Insurance Codes. If the accused is found guilty, they’ll have a felony record.

Most of the cases handled by Fraud Divisions in California involve:

  • Auto insurance fraud
  • Health insurance fraud
  • Personal injury/worker’s compensation insurance fraud
  • Residential or Commercial property insurance fraud

What California Considers Insurance Fraud

Unlike some laws which are vague, when writing the laws involving insurance fraud, California lawmakers clearly outlined what they felt was insurance fraud. According to state laws, you can be found guilty of insurance fraud if you:

  • Knowingly took the steps needed to commit insurance fraud, such as hiding a vehicle and then telling the insurance company it was stolen.
  • You went through with the fraudulent act and filed the insurance claim.
  • If the Fraud Division can prove that both the act and intent to commit insurance fraud went together.

It’s important to note that you can be found guilty of felony insurance fraud even if you never receive any money from the act.

California’s insurance fraud laws are written in such a way that the only thing that has to be proven is act and intent.

Who Can Accuse You Of Insurance Fraud

In most states, the insurance company is the one who has to alert the authorities to an act of insurance fraud, but California is unique. When you read through the Insurance Frauds Prevention Act, you’ll see language that allows a person who isn’t connected to the insurance company to file a lawsuit against someone who they believe to be guilty of insurance fraud. The interesting thing about the law is that it enables the private citizen, AKA the whistleblower, be “rewarded” 30-50% of the settlement or trial award once the insurance fraud case reaches its conclusion.

Penalties Of Being Convicted Of Insurance Fraud In California

The most devastating aspect of being found guilty of insurance fraud is that you’ll have a felony record. In addition to that the judge can order you to pay a civil penalty of $5,000 to $10,000 for each violation as well as paying up to three times the amount you collected in fraudulent insurance claims.