Are there criminal consequences for insurance fraud?

A person commits insurance fraud when he or she submits a claim to obtain monies from an insurance company for something that did not actually take place. Insurance fraud is typically classified as either hard or soft fraud. Hard fraud occurs when someone intentionally plans a loss, such as a fire, an automobile accident, or a stolen vehicle. They receive insurance money for their "accident." Soft fraud occurs when an individual pads a genuine insurance claim such as claiming more car damage than actually occurred.

Insurance fraud is a crime in every state and incurs stringent penalties. Contrary to some opinions, insurance fraud is not a "victimless crime" as insurers are not the only ones adversely affected. Those not directly involved usually end up paying higher premiums to compensate the insurance companies' losses. It is estimated that insurance fraud costs upwards of a billion dollars every year.

Penalties of Insurance Fraud

Restitution or repayment.

Those convicted of insurance fraud may be required to repay the insurance company as well as pay penalties. Repayment may exceed tens of thousands of dollars, depending on the amount of money received through the fraud and court-appointed sanctions.

Substantial fines. 

Fines vary depending on the severity of the crime and the various state laws. 

Possible prison sentence. 

Because of the extensive fallout of the crime, courts treat insurance fraud very seriously. Those convicted face the possibility of prison time as well as some form of probation. Charges and sentences vary between states, but prison time may average from a few months to several years.

Talk with an attorney to discuss the consequences of insurance fraud.