Defining Insurance Fraud According to the Law
Defining auto insurance depends on the statute violated. There are many forms of auto insurance fraud that you can face. Some of these are:
PEN 548 – Abandoning or Damaging Vehicle
According to PEN 548, it is a criminal offense to hide, destroy, injure, dispose, or hide a motor vehicle insured against damage or lose with the intention to prejudice or defraud the insurance provider.
When you are accused of an intention to defraud, it means you plan to deceive an insurance provider to make them lose money or damage their property and financial rights.
If you hide, destroy, injure, or abandon a motor vehicle and try to raise a claim, when found, you will be convicted of a criminal offense, even when the insurance provider never lost any money. If you do any of these things, even when the vehicle does not belong to you, you will still be found guilty of the offense.
PEN 550 – Fraudulent Claims
Under PEN 550, various types of insurance fraud offenses in California are found. One of the violations is found under PEN 550(a)(4) that involves the presentation of a fraudulent or false claim. A person can be accused of violating this law when they present destruction, theft, or damage claims that are falsified. Legally, this kind of fraud can be defined as:
- You claim payment for losses because of destruction, loss, conversion of a car or damage of the vehicle or its contents by the use of deception or falsehoods
- While making a claim, you were aware that it was fraudulent or falsified
- You intended to defraud the insurance company with your application
Just like in violating PEN 548, the insurance company does not have to suffer losses from the claim for you to be convicted.
For instance, you were backing up and accidentally hit a tree that caused a dent in your bumper. You decide it is not worth fixing it, and you let it go. One day, you get hit from the rear by another vehicle and choose to claim that the previous dent was as a result of the collision. When you submit the claim to your insurance company, you neglect to inform them of the dent you previously caused. When you claim for this damage knowingly, you are guilty of insurance fraud, according to PEN 550.
On the other hand, you may submit an insurance claim without knowing that some of the details are false. For instance, your car has had scratches on your rear bumper, and you do not know. One unfortunate morning, you get rear-ended, and as you come around, you notice the scratches. You assume they resulted from the crash and include them in your claim. In such a case, you are innocent of the offense because you never knew.
PEN 550(a)(4) – Raising Multiple Claims
You can violate PEN 550(a)(4) by:
- Submitting two or more auto claims for one loss to different or same insurance providers
- You are aware you presented more than one application for one damage
- You do so intending to defraud the insurance provider
PEN 550(a)(3) Causing a Crash
This is another type of auto insurance fraud. You commit this fraud when you:
- Get involved or cause a crash
- With the knowledge that the crash is aimed at producing fraudulent or false insurance claims
- Intending to defraud the insurance company
When the below are correct, you will be found guilty of insurance fraud if:
- The crash was as a result of a natural, direct, and possible outcome of your actions, and
- The collision may never have happened if you did not participate.
For instance, you have a car that has been costing you a lot in maintenance. You decide you need a better car, and to do that, you need to crash your current vehicle to get paid for the damages. You find a friend with a large truck that will not get damaged from a crash when it hits you. You plan to park your car on the road next to your house. Your friend removes anything that would identify his truck. You plan for a hit and run, which is a misdemeanor in California. Your friend hits your parked car, and you proceed to claim damages for the accident. If investigations reveal what you did, both your friend and yourself will be charged with insurance fraud.
PEN 550(b)(1)(4) - Issuing False Statements
Concerning insurance fraud as found under PEN 550, you can be found guilty if you do one of these:
- When you present an oral or written statement opposing an auto claim or as part of it, you are guilty of fraud. This is only when you know the account you have issued is misleading or has falsehoods.
- When you get ready to make an oral or written statement opposing or as part of a claim for payment in auto damages, knowing that the report is misleading or is false.
- Making or preparing to make a written or oral statement aiming at presenting it to an insurance provider to get auto insurance coverage. In the report, you may claim you live in California, while that is not the case.
When Business Owners or their Employees Commit Insurance Fraud
There are various ways in which both employers and employees can violate auto insurance statutes. When these violations are discovered, those involved are subjected to criminal offenses. Auto insurance fraud, in this case, is committed when:
- Any business entity looking for, referring or accepting business from another party or person knowing or disregarding whether the person or party plans to commit insurance fraud
- When the owner of an auto shop offers to share profits, issue commission, or a type of compensation with an insurance broker, adjuster, or agent. This is done when they refer their auto policyholders to the shop to get repairs done there.
Penalties for Auto Insurance Fraud
The penalties for these violations depend on the particular law violated. Here, we will discuss the penalties for each offense, as outlined above.
Penalties for Violating PEN 548 – Abandoning or Damaging Vehicle
When charged with abandoning or damaging a car for insurance fraud, it is a felony offense in California. A guilty verdict will see the defendant face the following penalties:
- Formal or felony probation
- State imprisonment for two or three or five years
- 50,000 or less in fines
If you had a prior conviction on auto insurance fraud, you would receive an additional two years of sentence increment for each sentence. This enhancement is found under PEN 548 and 550 in California.
Penalties for Raising Multiple or Fraudulent claims
In California, presenting multiple applications for the same loss or a fraudulent claim are felonies severely punished by the law. When you are convicted on either these offenses, you face the below penalties:
- Formal or felony probation
- State incarceration for two or three or five years
- Getting ordered to pay $50,000 in fines or two times the fraud amount, whichever amount is higher
Additionally, when the defendant has another conviction on auto fraud, they receive a sentence increment for every previous conviction. Aside from the two-year sentence enhancement, the defendant will not be eligible for probation as a penalty.
Penalties for Causing a Crash
When you are found guilty of causing a collision to receive insurance compensation, the prosecutor will bring felony charges against you. A conviction for the offense will see you face similar penalties as those of issuing multiple or fraudulent claims. Additionally, penalties for this offense carry various sentence enhancements. These include:
- Additional sentence enhancement of two years for every prior sentence in insurance fraud
- When you have prior two or more convictions for causing a crash, you receive further sentence enhancement of five years
- If any person suffered injuries during the accident and was not an accomplice, you gain an additional two other years
- When you directly inflict significant bodily injuries to a victim during the incident, you receive a sentence increment of three years
Penalties for Making False Statements
When you create or prepare to make false statements to commit insurance fraud, you can either be charged with misdemeanors or felony charges. The facts of the offense and the criminal background of the defendant determine how the prosecutor will prosecute the offense.
When a defendant gets convicted on misdemeanor charges, they face the following penalties:
- Summary or misdemeanor probation
- County jail sentence for a year or less
- $10,000 in fines or less
If convicted on felony charges, the penalties are as those of issuing multiple claims or fraudulent claims according to PEN 550(a)(4) and PEN 550(a)(2).
Penalties for Violating PEN 549 – Seeking, Referring, or Taking Business from Insurance Fraud
Violations for PEN 549 are wobblers in California, meaning you can be charged on either a felony or misdemeanor charges. If convicted on felony charges, you face the following penalties:
- Formal or felony probation
- Imprisonment for sixteen or twenty-four or thirty-six months
- $50,000 or less in fines or twice the fraud amount, whichever figure is higher.
A misdemeanor conviction, on the other hand, carries the following penalties:
- Summary or misdemeanor probation
- County jail time of not more than a year
- $1,000 in fines or less
When it is your first offense, you may get prosecuted on misdemeanor charges. If charged with a subsequent violation, you will get prosecuted with felony offenses.
Possible Legal Defenses for Auto Insurance Fraud
As seen under the various penalties for the different violations, a conviction on any insurance fraud case will lead to severe consequences. Auto insurance fraud is common, causing law enforcement units to pursue perpetrators of the offenses aggressively. When charged with any offense in insurance fraud, you require aggressive legal representation to fight the allegations against you.
Your lawyer will investigate the claims against you and the facts of the case to formulate a suitable defense. Some of the common defense strategies include:
You had no Intent to Defraud
One of the significant elements a prosecutor must prove in insurance fraud cases is intent. Without intending to defraud the insurance company, you cannot be found guilty of insurance fraud. Sometimes, a reckless mistake you committed while claiming for damages may be marked as possible fraud. If the prosecutor can prove you were intentional in your claim to defraud the insurance company, then you get convicted of the offense. However, if your lawyer can show that you made an honest and straightforward mistake, you will not get a conviction for the offense.
No Sufficient Evidence to Convict You
For every criminal case, the prosecutor must leave no doubt in the jury that you carried out the offense. The facts in an insurance case can be challenging to prove. If the prosecution lacks sufficient evidence to prosecute you of the offense, the charges against you can be dismissed.
California State prosecutors treat fraud crimes seriously. If you are facing charges for auto insurance fraud, you might face penalties that can be detrimental to both your professional and personal life. However, most of these charges can be reduced to other lesser offenses or dropped altogether. We advise you to get in touch with our attorneys at the Long Beach Criminal Attorney as soon as possible to help review your case and establish a suitable defense strategy. Get in touch with us today at 562-308-7807