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Automobile Insurance Fraud Information

Two cars colliding in a fender bender

Automobile 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

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)
California Department of Industrial Relations (DIR)
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.