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4 Common Types of Insurance Fraud

By Hager & Schwartz, P.A.

September 2, 2022

There are numerous methods that individuals may use to receive an insurance payout that they are not necessarily entitled to. Let’s discuss some of the most common types of insurance fraud schemes and the potential penalties if charged with one of these serious offenses.

Car Insurance Fraud

Car insurance fraud is one of the most common types of insurance scams. In a financial bind, some people may attempt to file false or exaggerated claims in order to receive a higher settlement from an insurer.

Some of the most common examples of car insurance fraud include:

  • So-called stolen vehicle: The driver may destroy or abandon their vehicle, then claim it was stolen.
  • Registration fraud: To save money on insurance premiums, some drivers register their vehicles in states other than where they live.
  • Repair costs: After a legitimate accident, a driver may report a higher cost of repairs than the estimate they were given. This is done in the hopes of receiving a higher settlement, so the driver is able to keep some profit. In some cases, body shops might be in on the deal for a share of the profits.
  • Duplicate claims: This occurs when a driver files multiple separate claims for the same incident or vehicle damage.
  • Teen drivers: Insurance costs tend to increase when a teen driver is added. Some parents may neglect to add their teenager to their policy, which is considered fraudulent and can nullify the policy if the young driver is at-fault for an accident.
  • Staged accident fraud: This serious type of fraud occurs when a driver stages an accident with a knowing or unwitting party to receive a payout.

Health Insurance Fraud

It’s no secret that many people are frustrated with the high cost of healthcare in our country—which leads many patients and medical professionals to commit insurance fraud.

Patients may commit healthcare fraud in a number of ways, including if they allow someone else to use their policy, or use their benefits to obtain prescriptions illegally.

Healthcare providers may also commit fraud when billing patients for services. They may overbill the patient for their co-pay or bill for services not rendered. Providers may also go a step further and conduct tests that are unnecessary in order to bill them for insurance and receive more money.

Homeowner’s Insurance Fraud

This type of fraud most often involves a homeowner or tenant filing an exaggerated claim for property damages on a property or renter’s insurance policy. For example, the policyowner may falsify a burglary or exaggerate the losses of a theft. They may also stage or exaggerate an accident causing property damage, such as a fire or a flood
COVID-19 Insurance Fraud
There has been a recent push to investigate instances of insurance fraud stemming from the COVID-19 pandemic.

This includes cases involving:

  • Healthcare or Health Insurance Fraud
  • Unemployment Insurance Fraud
  • Phantom claims
  • Double claims

Criminal Penalties for Insurance Fraud

Individuals charged with insurance fraud could face state charges, federal charges, or both.

Felony insurance fraud may range from third- to first-degree charges. In the most serious first-degree felony cases, penalties may be:

  • Up to 30 years in prison
  • Up to $10,000 in fines

When the incident involves a government entity, these penalties may increase even further. You may be convicted on federal insurance fraud charges if the fraud involved an agency like Medicare or Medicaid, if you were investigated by federal law enforcement, or if the fraudulent activity affected individuals in multiple states.

In addition to criminal penalties, you may be required to pay civil fines as well. This can be as much as an additional $50,000 payment.

Insurance Fraud Defense in Florida

If you have been contacted regarding suspected insurance fraud, you need to contact a defense attorney as soon as possible. Many people engage in insurance fraud schemes because they believe that the potential penalties are minor if caught, or that because it is a nonviolent offense that it is not as big of a deal.

This is not true; insurance fraud is aggressively investigated and prosecuted. If you have been accused of committing insurance fraud, Hager & Schwartz, P.A. has the knowledge and experience needed to defend you in court. Reach out to our team today to discuss the specifics of your case. Call (386) 693-1637 or click here to set up a consultation.