insurance fraud

Being Accused of Insurance Fraud?: Here’s What You Need to Do

Insurance fraud is handled differently state-by-state. It can be considered a misdemeanor (less serious) or a felony (severe) depending on the type of fraud committed and the number of damages incurred.

In the following article, we’ll be talking more specifically about insurance frauds. We’ll discuss circumstances, involved parties, and the options you have if accused. Let’s begin! 

What Is Insurance Fraud?

The question of what is fraud, as it relates to insurance, is a compelling one. Because fraud can exist in a few broad forms, and the punishment can range from fines and probation to jail time (usually accompanied by some form of monetary damage as well).

Let’s turn our attention for a moment to the: 

Types of Insurance Fraud

Insurance fraud generally comes in four key forms. Punishments are not specific to the type as much as they are the extent of damages. Damages over $1,000, for example, will be judged more harshly than those under.

In Texas, notes FindLaw, an insurance fraud crime of less than $50 will be classified as a Class C misdemeanor. This usually results in a $500 fine. Crimes of more than $200,000 are considered first-degree felonies.

That’s the spectrum. And obviously, these come with harsher punishments, including anywhere from a few to 99 years in prison. Whatever the sentencing, it usually stems from one of these situations. 

Exaggerated Estimates

Exaggerating an estimate is one of the most common types of insurance fraud because it stems from an actual incident or claim. In other words, you’re working with existing damages. The fraudster takes advantage of that fact. 

One often-used tactic is to group proximal damages from a previous incident in with the current incident. This usually happens when there are two accidents to the same side of the vehicle.

The damaged party tries to get both repairs paid for even though one incident happened long prior to the claim he’s filed and was never addressed. 

Misreported Damages

Misreporting of damages can take many forms, but one example would be the homeowner who suffers a burglary. He sees this as an opportunity to file a claim on value beyond the value of that which was stolen. 


We typically see this with workers’ compensation fraud. An employer under-reports the size of his payroll to reduce the size of the premiums he has to pay.

While it may save him a buck or two before he’s caught, it limits the protection of his workers and places him directly in the crosshairs of insurance fraud investigators. 

Complete Falsification

Falls like this one probably are what comes to mind when you think of complete falsification. But they can get a lot more complicated.

Sometimes people use their position to take advantage of the system. Take the case of Dallas-based medical product sellers Terry and Rocky Anderson. This father-and-son team ran a five-year scam where they submitted false claims for some of the products they sold in their stores.

The scheme “worked” at first, but what you’ll find is this. The more “success” you have, the more daring you become. When the shoe finally drops, it’s a guaranteed felony and harder to defend. 

The Victims of Insurance Fraud

Insurance fraud is not a victimless crime, contrary to what you might hear some insurance company-haters claim. For starters, no company should have to pay for damage that doesn’t exist. You wouldn’t expect a store owner to open the cash register if someone walked in and said, “Give me money.” 

There’s a word for that: robbery. And insurance companies have to make up those discrepancies somewhere if they’re going to stay in business. Naturally, the buck gets passed along to other insurance customers, resulting in rising costs and other inconveniences.

But there’s another type of insurance fraud victim as well. This type doesn’t generate as much discussion. 

The One Victim No One Talks About

We’re talking about people who are falsely accused. These individuals fall into two camps: completely innocent and individuals who are accused beyond the extent of their crimes.

An experienced defense attorney can easily defend both. The typical approach is to use one of these four defenses. 

4 Insurance Fraud Defenses

Each of the following defenses takes a different approach to getting the charges tossed or reduced. All share the goal of reasonable doubt. Let’s see how they operate.

1. Lack of Intent

In these cases, the accused might have benefitted from the claim of insurance fraud. However, he’s innocent until proven guilty. And it’s the job of the plaintiff to prove the benefit was as the result of a crime.

Crimes are very difficult to prove if the harm was done was from an unintentional circumstance. If criminal intent or willful negligence cannot be proven, then the outcome favors the defendant.

2. A Mistake of Fact

Say you have a car owner whose car caught on fire and burned up. He files a claim on it. He receives payment. 

Sometime later, it’s discovered the fire started through suspicious circumstances. Since the car owner benefited from the insurance claim, he’s the prime suspect.

The insurance company moves forward with a fraud claim. But it’s later discovered that someone with an ax to grind started the fire.

A reputable defense attorney would be able to get the case thrown out or reversed. The “mistake of fact” here isn’t that the insurance company was victimized. It’s that the person who victimized them was different from the one who benefited from the claim.

3. Partial Defense

Remember the example we used about trying to piggyback one set of damages onto another because they happened closeby? In this case, an insurance company might go after the party for maximum damages.

The reality, however, is that the most recent claim is legitimate. Obviously, the defendant “loses” in this scenario. But reducing the amount of fraud would also reduce the severity of the penalty. 

4. The Truth

The facts are on your side. You win every time!

Insurance Fraud Accusations Can Be Defended Successfully

It can certainly be intimidating to face an accusation of insurance fraud. But don’t give up if you find yourself in that situation. 

The law forces your accusers to prove their claims beyond a reasonable doubt. Contact us today if you need an attorney with many years of experience successfully defeating false or overreaching accusations.