Auto insurance fraud is a phenomenon that has, every year, caused the loss of billions of dollars in the US. Dishonest drivers are using many means from staged car crashes, filing claims for unneeded treatment, and premium rating errors.
Studies by the Insurance Research Council in 2012 show that auto insurance fraud caused the loss of about $5.6-$7.7 billion to fraudulent auto-injury claims. These fraudulent claims make up 13% to 17% percent of the total compensation offered as auto-injury coverages.
In California, the state bureau discovered over 17,000 fraudulent claims in 2014. The California Department of Insurance, in 2014, discovered fraudulent claims totaling $8.3 million.
As a result of many cases of auto insurance fraud claims, California became one of the hotspot states. This means that the slight suspicions can see you get charged with auto insurance fraud.
If you discover that your insurer has reported your auto insurance claims (whether auto-injury or vehicle damage), you need to seek legal help from the Orange County Criminal Defense Attorney Law Firm. Talk to our criminal defense attorneys about your fraud crime and have a better defense against the prosecution. We will help you have the criminal charges dropped or penalties lowered.
What is Auto Insurance Fraud?
Generally, auto insurance fraud involves filing fabricated, exaggerated, or fraudulent claims to your vehicle insurance provider concerning the damage done to your automobile, the loss of your car through theft, or injuries incurred following a car accident.
Auto insurance fraud can involve people like lawyers, doctors, injured persons, and drivers. Auto fraud insurance can come in different forms like:
- Soft insurance fraud - A lesser fraud offense when compared to hard fraud. Typically, soft fraud involves taking advantage, in a devious way, of an incidence. You commit soft fraud crime if you incur injuries, but file a claim for more severe harm than you have suffered, to receive more compensation than you deserve. People find it easy to commit soft fraud since it is hard to identify, particularly where back, head, and neck injuries are involved.
- Hard insurance fraud - When compared to soft fraud, hard fraud is more severe and attracts more severe penalties. Events that lead to hard insurance fraud include a deliberate car crash, staged carjacking, or planning a devious strategy to receive money from car insurance providers. Reports of hard insurance fraud are, however, lesser than those of soft insurance fraud.
- Frequency of auto insurance fraud - The most widespread auto insurance fraud is the amplification of legitimate injuries incurred in a typical car accident. Another prevalent auto insurance fraud is staging car theft, and finally, filing claims for non-existent injuries.
Common Types of Auto Insurance Fraud
According to the Coalition Against Insurance Fraud, California tops in the list of states where auto insurance fraud is common. Auto insurance fraud happens in many ways, like:
The US Department of Transport reports that approximately one million airbags deploy in the event of a car crash. These airbags are imperative to save life up to 45 percent. Some repair shops replace these airbags with fake ones or stuff garbage in the area with the intent of receiving money.
Your insurer pays for the repairs, not aware that the mechanic stuffed odd objects. Here, the auto repairer commits auto insurance fraud.
Staged Vehicle Accidents
According to the National Insurance Crime Bureau, there was an increase in staged accidents by 102% between 2008 and 2011 across the USA. The bureau further mentions incidences of stages crashes as:
- Drive down - On a left turn (victim’s car), another driver (the fraudster) signals the victim into turning, and then the fraudster decides to crash their car to that of the victim
- Swoop and squat - Here, two cars, one in front and another behind traps another vehicle in a rear-end crash
- Panic stop - A fraudulent driver in front applies instant brakes, and the car immediately behind rear-ends them. Later the driver at fault files a claim to an auto insurer knowing that they staged the accident
Fraudulent Insurance Agents
While insurance agents are the solace when you get involved in an accident, a significant percentage are fake. The Coalition Against Insurance Fraud reports that rogue insurance agents steal premiums from unsuspecting car owners. In the event of a genuine car crash, you realize that the premiums never reached your insurer.
Definitions of Auto Insurance Fraud Per California Law
Below are various automobile insurance fraud definitions according to California penal codes:
Penal Code 548 PC – Damaging or Abandoning Vehicle
People abandon their vehicles for different reasons, but the law prohibits you from chasing after your insurer afterward for compensation.
According to California Penal Code 548 PC, it is illegal to hide, dispose of, destroy, or abandon your car when it is covered against damage or loss, defraud your insurer.
Defrauding your insurer involves deceiving the provider to get compensation in the form of money. Defrauding causes damage to the insurance company’s finances, property, and legal rights.
You can get charged with auto insurance fraud by damaging your vehicle even if the provider does not incur losses following your crime. Also, you can get charged even if you damage another person’s vehicle.
For instance, you borrow your partner’s car and paint it without the owner’s knowledge with the intent of collecting compensation for vandalism. If the insurer or law enforcers discover that you sprayed the vehicle, you are charged with auto insurance fraud and not the car owner.
Penal Code 550 PC – Fraudulent Claims
The California penal code entails many other laws of auto insurance fraud. Fraudulent claims code is under Penal Code 550(a)(4), and it is illegal to file fraudulent claims for alteration, damage, or theft of a motor vehicle.
Under Penal Code 550(a)(4) auto insurance fraud is defined as:
- The false or fraudulent submission of claims asking for compensation due to damage, theft or modification of a vehicle or parts of the car
- Filing of fraudulent claims with an intent of defrauding a car insurance provider
Unlike Penal Code 548, with the fraudulent claims law, you don’t have to suffer monetary loss to file a claim. For example, your car has a broken rear bumper from a previous accident, then, another driver hits your vehicle from behind, causing more damage, if you file claims stating that your car had no pre-existing damages, then you are guilty of violating Penal Code 550(a)(4).
Note that you can only get punished by the law if you are aware that the claim is fraudulent. Your car might have small dents in the rear that go unnoticed. Then, you are involved in a rear-end accident, where you notice dents for the very first time. If you file insurance claims, then you do not violate the law.
Penal Code 550 PC – Multiple Claims
Many drivers have violated the California Penal Code 550 PC knowingly. According to this code, it is illegal to:
- File more than two claims of a similar loss to one or many insurance providers
- Deliberately filing two similar claims for one damage to gain money fraudulently
Penal Code 550(a)(3) PC – Intentionally Causing an Accident
Law enforcers and insurers alike find it had to detect a staged accident. According to the California Penal Code(a)(3), you are guilty if you partake in a vehicle accident with an intent to file fraudulent claims to receive compensation.
You are guilty of the fraud crime if:
- The car crash was direct and as a result of your act
- The car accident wouldn’t have occurred without your participation
Penal Code 550 PC Subsections (b)(1)-(4) - False Statements
You can commit auto insurance fraud through false statements. Below are acts that lead to violation of the California Penal Code 550:
- The presentation of oral or written statements to support or oppose auto insurance fraud, with the knowledge that the statements about your car accident are false
- The preparation of oral or written statements to support or oppose automobile insurance compensation, if aware that the statements are misleading, fraudulent, or false regarding any fact
- The preparation of oral or written statements to defraud an insurer in another state other than yours. For example, it is illegal to obtain car insurance from an insurer in New York when you live in California
Penal Code 549 – Soliciting or Referring Auto Insurance Fraud Business
Workers and business persons in the vehicle-selling business can commit auto insurance fraud crimes prohibited under California codes in many ways.
Car business owners commit fraud crimes when they accept, solicit, or refer another insurance business to/ from another individual, knowing that the individual is looking to defraud an insurer.
Car repair shop owners are charged with fraud when they offer commission or share profits with an auto insurance adjuster, broker, or agent, to get referrals of policyholders to buy spare parts covered by an insurance provider.
Possible Punishment for Auto Insurance Fraud in California
Punishment and penalties for auto insurance crimes in California differ according to the specific penal code violated. For instance, penalties for damaging a vehicle to defraud a company are different from soliciting auto insurance business.
- Penalties for Violation of PC 548 – Damaging/Abandoning Your Vehicle
You subject yourself to criminal liability if you abandon or damage your car to file claims with your insurance provider fraudulently.
If you violate this code, you are charged with a felony, and possible penalties are jail-time of two to five years in the county jail or a fine of $50,000 or less.
The jury, however, can sentence you to felony probation in place of imprisonment. The law also adds a two year-sentence for each felony crime. For example, if you violate two penal codes (548 and 550), you receive different penalties for each.
- Penalties for Violation of PC 550 – Fraudulent Claims/Multiple Claims
Filing a fraudulent claim comes under California Penal Code 550(a)(4) PC while filing multiple claims comes under California Penal Code 550(a)(2).
If you violate any of these two California codes, you are charged with a felony crime. Possible penalties for these criminal offenses are imprisonment in the county jail for not more than five years, formal probation, a fine not more than $50,000, or even fines twice the amount you received fraudulently.
But violating PC 550(a)(4) is a wobbler criminal offense. Here, the prosecution can charge you with a felony or misdemeanor. Punishment for misdemeanor convictions is jail-time in the county jail not exceeding one year or a $10,000 fine or less.
A two-year prison sentence is added for every felony you are convicted for if you violate penal codes 548 or 550. And, if you have a history of felony crimes, you cannot receive felony probation instead of imprisonment.
- Penalties for Violating PC 550 – Causing an Accident
Staging a car crash with an intent of fraudulently receiving compensation from an insurer is a felony crime under California Penal Code 550(a)(3) PC.
Punishment for violating PC 550(a)(3) is imprisonment for two, three, or five years in the county jail, formal probation, a fine not exceeding $50,000, or even a fine that is double the money you benefit following your auto insurance fraud.
Causing an accident to defraud an auto insurer is a serious felony crime in California can come with other enhancements like:
- An additional jail-time of five years if you have more than two felony convictions for violating PC 550(a)(3)
- An addition of two-year jail-time for every injured person following the staged accident. The enhancement applies for minor injuries
- A three-year sentence enhancement should you cause severe injuries to another person following your staged crash
- Extra two years in prison for each commission of a felony crime within auto insurance fraud per California Penal Code 548/ 550
- Punishment for Violating PC 550 – False Statements
Presenting false statements like fraudulent claims is a wobbler under California Penal Code 550(b)(1)-(4). So, if found guilty of presenting false statements, the prosecution can charge you with a misdemeanor or felony. Your charges depend on your (defendant) history of criminal offenses and the in-depth details of your commission.
False statements, filing multiple claims - PC 550(a)(2), and fraudulent claims - PC 550(a)(4) crimes have similar punishments under California law.
The penalties are different if the prosecution charges you with a misdemeanor for violating Penal Code 550(b)(1)-(4). The possible punishment includes a fine of $10,000 or less, jail-time of not more than a year in the county jail, or misdemeanor probation.
- Penalties for Violating Penal Code 549 – Accepting, Soliciting, or Referring Auto Insurance Fraud Business
If you are in a car dealership, you can be charged with auto insurance fraud under California law, if you accept or refer a vehicle owner who has fraudulent intentions of committing automobile insurance fraud. Under Penal Code 549, this type of offense is under wobbler crimes.
If found violate PC 549, a felony, possible penalties are jail-time for 16 months, two years, or three years in the county jail, formal probation, a fine not exceeding $50,000, or twice the amount you gained through auto insurance fraud.
If the prosecution charges you with a misdemeanor, the jury can impose penalties like jail-time of not more than a year, a fine that doesn’t exceed $1,000, or misdemeanor/ summary probation.
For second or more commissions of auto insurance fraud, you get charged with a felony criminal offense.
- Penalties for Violating Penal Code 551 PC - Receiving Kickbacks from Auto Repair Stores
The punishment for violating California PC 551 depends on the amount gained fraudulently. Under the law, if you receive kickbacks amounting to $950 and below, your crime is classified as a misdemeanor. The potential penalties if convicted are a fine not exceeding $1,000 or jail-time of not more than six months.
If the kickbacks involved amounts of money more than $950, then your crime is classified as a wobbler. If the misdemeanor crime includes over $950, the jury can sentence you to prison for not more than a year, a fine not exceeding $1,000, or both.
A felony conviction sees you spend 16 months, two years, or three years in the county jail. The jury can also impose a fine not exceeding $10,000.
Legal Defenses to Auto Insurance Fraud Under California Law
California is among the hotspot states where auto insurance fraud cases are taken seriously. Any suspicion of committing fraud crime puts you under intense investigation.
The Automobile Insurance Fraud Division reports that approximately 10% of the claims presented to auto insurers are fraudulent. Again, insurance firms enjoy political backup; hence, fraud cases get attention fast. That said, you are likely to be charged with auto insurance fraud wrongly.
Here are legal defenses your criminal defense attorney can use to argue against your prosecution in California.
You Had No Fraudulent Intent Following Your Actions
The prosecution has to prove beyond a reasonable doubt that you had fraudulent intent when presenting any form of claims to your auto insurer. Perhaps you made a slight blunder without noticing, and your auto insurer reported to the law enforcers as insurance fraud.
You need a competent criminal defense attorney in California to argue that you had no intent to commit fraud and have the charges dismissed or proceed with a not-guilty plea in court.
Evidence Presented Against You for Auto Insurance Fraud Is Insufficient
Auto insurance fraud cases are hard to prove, and the involved processes are complex, especially on the prosecution’s end. The trial finds it challenging to offer the court enough proof of what ensued. And, the burden of proof is more cumbersome if the testimonies involved are conflicting, is the evidence is circumstantial, and if the paper processes are complicated.
Claims for Damages to Your Car Were Correct
An insurer can report to the authorities behind your knowledge that you presented false claims for damages to your vehicle following a road accident. While this is the fault of the auto insurer, your criminal defense attorney scrutinizes all the facts, and if accurate, your charges will perhaps get dismissed.
Offenses Related to Auto Insurance Fraud Per California Law
Criminal offenses that are closely related to California auto insurance fraud are:
- Penal Code 451 PC – Arson
Under California PC 451, it is illegal to set a fire knowingly and with malicious intent. In the content of auto insurance, it is illegal to set your vehicle on fire and file fraudulent claims to obtain money from your insurer.
Arson is a felony crime in California, and potential penalties for violating PC 451 PC are a fine of not over $50,000 or twice the amount of money compensated by the insurer. There is also a possibility of jail time in the county jail. You can spend three years maximum, two years, or even 16 months, depending on the amount involved.
- California Health Care Fraud
Health care fraud is another rampant crime in California, and it involves presenting fraudulent bills to a health insurer for medical services never offered or higher priced than those provided at a facility.
Under California PC 550, it is illegal to commit health care fraud that is similar to the commission of automobile insurance fraud per the law.
Road accidents reported every sunrise are either genuine or fraudulent. Fraudulent claims to insurers for both auto and health compensation are illegal in California. If charged with these, you are punished for both accounts.
- Vehicle Code 10501 VC – Making A False Report of Vehicle Theft
Making false reports for vehicle theft is illegal and closely related to auto insurance fraud. See, when you report that your car is stolen, and it is covered for theft by an insurer, the insurer should compensate you. If the car theft claims are false, you violate both California VC 10501 and California PC 550.
Vehicle Code 10501 VC is classified as a misdemeanor and possible punishment include six months for a first crime commission or equivalent to penalties for PC 550.
Find a Orange County Criminal Defense Attorney Law Firm Near Me
The fight against auto insurance fraud in California is serious. Defending against your auto insurance fraud case is imperative. Imagine losing your freedom when you land in jail. You also lose contact with your friends and loved ones; you lose your income and thousands of dollars to court fines.
Avoid all these repercussions that come with fraud crime convictions by seeking help from the Orange County Criminal Defense Attorney Law Firm. Our criminal defense attorneys are on standby to listen to you, look into your criminal charges, and comes with defenses or strategies to have the case dropped or charges reduced. Dial us today at 714-740-7848 and allow us to get your freedom back.