Insurance Fraud is a popular white collar crime that you may have heard of in famous cases throughout history. This crime is seen across the country from California to Florida and Maine and occurs when somebody chooses to deceive an insurance company in order to collect money that they are not entitled to. If you’d like to think of it as one way, it is a type of theft. Many states have taken measures to establish bureaus to identify and investigate these insurance fraud incidents. Depending on the nature and extent of the crime, they can be classified as either a felony or a misdemeanor. So, why are fraudulent insurance claims so unlawful? They affect society as a whole, not just insurance companies or one single person involved. These schemes steal an outstanding 80 billion dollars per year in the United States! Because of the fact that insurance companies charge higher premiums to cover their fraud losses, this affects everyone involved in the insurance process. As an individual or businessman, you can expect your rates to skyrocket and consumers have to pay more due to the higher prices offered by businesses.

Common Types

Insurance fraud schemes can actually take on a variety of different forms. However, here are some of the most common types: Premium Diversion: This is a scam that involves the embezzlement of insurance premiums. An insurance agent, broker, or managing general agent may keep remit premiums all to themselves for personal use. Another type involves selling insurance without a license and collecting payment but not paying off the claims.Insurance Fraud Crimes Fraudulent Surplus: Criminals can gain access to fraudulent assets and capitalize an insurance company. This provides many insurance companies to write insurance coverage and accept premiums for personal gain. Asset Diversion: This is the theft of insurance company assets. Viatical Settlement Fraud: This allows policy sellers to make misrepresentations to investors about the life expectancies of insured parties, which falsely guarantees high rates of return. Staged Auto Accidents: Criminals can maneuver innocent motorists into accidents, then making large and illegal claims for fake injuries and property damage. It results in higher insurance premiums for drivers. Bodily Injury Fraud: These claims involve fictitious or exaggerated information for bodily injury. Property Insurance Fraud: Criminals will file insurance claims seeking payments higher than the value of the property damaged or destroyed. In some cases, you may find a business owner who destroys their own inventory and then files insurance claims for inflated value on the items.

Penalties for Insurance Fraud

There are two differences that you should understand, known as “soft fraud” and “hard fraud.” Here are the differences between the two:

  • Soft Fraud: This occurs when a person exaggerated an existing claim. This could imply overstating damages caused by a car accident. The criminal will usually receive a misdemeanor, punishable by fines, jail time or up to one year, community service, and probation.
  • Hard Fraud: This is when a criminal either causes or fabricates a loss to obtain insurance payments. It is almost always a felony, which is punishable by strict penalties including incarceration in state prison for years.

Have you fallen victim to insurance fraud? Do you feel like you have a case? Insurance fraud is a very serious white collar crime that puts people out of their rightful money. Call The Law Office of Peter Blair today for help with your white collar crime needs.