What is Insurance Fraud? Penalties for Insurance Fraud

According to the Federal Bureau of Investigation (FBI), insurance companies collect over $1 trillion in premiums every year. This extraordinary amount of money increases the risk for illegal activity, like insurance fraud, to be committed. Insurance fraud can be committed in a variety of ways, such as in relation to car accidents, medical care, or property damage. Florida has specific laws criminalizing this type of white collar crime.

What is Insurance Fraud?

In general terms, insurance fraud involves a person knowingly making a false or misleading statement in connection with a claim or payment made, or to be made, under the terms of an insurance policy. Under Florida law, a person commits insurance fraud if he or she, with the intent to injure, defraud, or deceive any insurer, presents false, incomplete, or misleading information.

There are two forms of insurance fraud: soft and hard fraud. Soft fraud involves the exaggeration of legitimate insurance claims. An example of this is if a person reports that the cost to repair damage to a car is higher than it is in reality. In contrast, hard fraud involves making a false claim or intentionally causing something to happen in order to make a claim, such as by setting property on fire, in order to make a claim for property loss. Hard fraud is generally considered a more serious violation than soft fraud, but both can lead to significant penalties.

Penalties for Insurance Fraud

The criminal penalties depend on the value of the property involved in the violation and include the following:

  • A third degree felony for property valued at less than $20,000;
  • A second degree felony for property valued between $20,000 and $100,000;
  • A first degree felony for property valued over $100,000.

Individuals convicted of insurance fraud may also be subject to civil penalties. Any civil penalty assessed is paid to the Insurance Regulatory Trust Fund, which is part of the Department of Financial Services. This fund is used in the investigation and prosecution of insurance fraud cases. A civil penalty may be imposed when a person is convicted of a violation of any of the false and fraudulent insurance claims statute for the purpose of receiving insurance proceeds from a motor vehicle insurance contract. A first-time offense of this type of insurance fraud may result in a fine of up to $5,000.

A special civil fine is imposed on an individual who organizes, plans, or knowingly participates in an intentional car crash or scheme to claim a car crash occurred that actually did not occur for the purpose of making motor vehicle tort claims or claims for personal injury protection benefits. The civil penalty for this crime is a minimum of $15,000, up to a maximum of $50,000. Additionally, it is a second degree felony with a mandatory minimum term of imprisonment of two years.

Florida Criminal Defense

A person accused of committing insurance fraud faces the potential for significant penalties. These cases are often very complex, which means you will need experienced legal representation. If you are facing insurance fraud allegations, contact the West Palm Beach criminal defense attorneys at Farkas & Crowley, P.A. today. We can help you protect your rights.