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Automobile Insurance Fraud Information

Two cars after colliding in a fender bender, one driver dialing on their cellphone

Automobile Insurance Fraud occurs when someone knowingly lies to obtain a benefit they are not otherwise entitled to receive. It can involve someone giving false and/or misleading information or documentation.

Some types of common frauds include:

  • Crash and Buy- Purchasing an insurance policy after a collision and lying about when an accident occurred to obtain coverage.
  • Paper Collision - Parties conspire to create illusion of legitimate accident using either pre-damaged vehicles or by intentionally and covertly inflicting damage on the suspect's vehicle(s). Generally, law enforcement is not called to the scene of the accident.
  • Organized Ring - Collision orchestrated by organized criminal activity involving attorneys, doctors, other medical professionals, office administrators and/or cappers.
  • Faked Property Damages - Damages to vehicle exaggerated, non-existent, pre-existing or vehicle damaged at a later point in time.
  • Inflated Damages - Damages inflated or exaggerated, non-existent or pre-existing; excessive billing of vehicle body parts or repair work.
  • Premium Fraud- Failing to disclose all material information when obtaining an insurance policy.

Consequences of Committing Auto Insurance Fraud

Automobile insurance fraud is a felony in California.

Violators can spend up to 5 years in prison, followed by a period of probation, as a result of a felony conviction. Violators can be ordered to pay a fine of $50,000. Penal Code § 550
In addition, violators will be court ordered to pay restitution to the insurance company for the amount paid on a fraudulent claim and the insurance company’s costs of the investigation.

There are many other associated expenses such as court costs and legal fees, not to mention the stigma of being a convicted felon.

You Can Be Convicted Of Insurance Fraud Even If The Insurance Company Does Not Pay Out On The Fraudulent Claim

Who can I contact about automobile insurance fraud?

Email us at to report suspected automobile insurance fraud or request an outreach presentation for your group or organization.

Frequently Asked Questions

Q:  What are the most common criminal charges for insurance fraud?

A:  Most prosecutions of insurance fraud allege one or both of the following:
·  Penal Code section 550
·  Insurance Code section 1871.4

Q:  Are there any other agencies or department where I can find more information?

A: Yes, 

California Department of Insurance (CDI)
800-927-HELP (4357)

Coalition Against Insurance Fraud (CAIF) 

National Insurance Crime Bureau (NICB)

Q:  How does insurance fraud effect the community?

A:   Insurance Fraud totals over $15 billion each year, which is an average of $500 a year per resident of California.  This results in higher premiums, higher taxes, and higher prices.  Insurance fraud is the second most costly crime in the country.  The impact of insurance fraud has a direct effect on a communities’ residents.  Click here for more information on the effect of insurance fraud.

Q:  Who commits automobile insurance fraud?

A:  Perpetrators range from first time opportunists to organized criminal rings and can be auto repair professionals who charge for services/parts not rendered, or ordinary people who want to cover their deductible, pay less in premiums, or view filing a claim as an opportunity to make a little money.

Q:  What are staged crashes and what can they look like?

A:  Staged crashes are also sometimes known as set-ups because the crash is set up by one or more perpetrators to collect on a claim against your insurance policy.  Some common stages crashes are:

Swoop & squat. A vehicle swoops in front and jams on its brakes. You hit the rear. Passengers claim painful injuries. Your auto policy is falsely billed thousands.

Drive-down. You’re merging or turning. A dishonest driver waves you forward, then deliberately crashes into your vehicle blaming you. Drivers also wave you out of a parking space, then dart into your path.

Shady helpers. A stranger approaches the crash scene, or phones you right after. They try to steer you to a medical clinic, body shop or lawyer. You may be being set up for bogus insurance claims.

Q:  Who are likely victims of staged crashes?

A:  Automobile Insurance fraud has a direct effect on innocent, law-abiding citizens. Fraud perpetrators have staged automobile collisions resulting in serious injuries and even loss of life.  Perpetrators looking to stage collisions will often pick members of the community who may not be aware of their rights or local laws and less likely to report the fraud.

Q:  I was involved in a car accident.  What can I do to prevent insurance fraud?

A:  If safe to do so, after a crash take photos of damage to vehicles, the driver and any passengers.  In some jurisdictions, law enforcement may not respond to the scene of minor accidents if there are no injuries, so it’s important to document the scene.

Be accurate and honest when speaking to any member of law enforcement or an insurance company representative about the details of the accident.  If the other driver asks you to lie about when the accident occurred or any other aspect of the incident, DON’T DO IT.  The other driver might be attempting to commit insurance fraud, and if you go along with it, you could also be vulnerable to arrest and prosecution.