Insurance fraud occurs most often when an insured individual or entity makes a false or exaggerated insurance claim, seeking compensation for injuries or losses that weren't actually suffered. This type of crime also can be committed upon customers through the sale of unlicensed or bogus insurance coverage to unsuspecting clients, or an insurance broker or agent's diversion or theft of insurance premiums paid by clients.

Below we discuss the basics of insurance fraud, including the different types of offenses, elements of the crime, and more.

Definition of Insurance Fraud

Fraud in the context of insurance refers to any duplicitous act performed with the intent to obtain an improper payment from an insurer. This crime is committed by individuals from all walks of life. Law enforcement officials have prosecuted doctors, lawyers, chiropractors, car salesmen, insurance agents, and people in positions of trust. Anyone who seeks to benefit from insurance through making inflated or false claims of loss or injury can be prosecuted.

The pervasiveness of the crime drives up costs for all consumers and costs the insurance industry billions of dollars each year. One authority estimates that the annual value of insurance fraud approaches $150 billion. Detecting insurance fraud is difficult because of the surreptitious nature by which the criminal perpetrates the fraud.

Depending on the specific issues involved, an alleged wrongful act may be handled as an administrative action or law enforcement may handle it as a criminal matter.

Types of Insurance Fraud

Police and prosecutors typically refer to a fraudulent insurance scheme as either "hard fraud" or "soft fraud."

• Hard Fraud: Someone deliberately fakes an accident, injury, theft, arson or other loss to collect money illegally from insurance companies. Crooks often act alone, but increasingly, organized crime rings stage large schemes to steal millions of dollars.
• Soft Fraud: Normally honest people often tell "little white lies" to their insurance company for the purposes of filing or maximizing a claim. Many people think it's just harmless fudging. But soft fraud is a crime, and seemingly minor offenses collectively raise everyone's insurance costs.

Other common examples include the following:

• Auto damage due to a "phantom vehicle;"
• False slip and fall claims;
• False disability claims;
• Inflated billing by a medical provider or billing for services not provided; and
• Using another person's identity to secure health care benefits.

Typical Elements for Fraud

In any insurance fraud case, there are certain elements that must be proven beyond a reasonable doubt in order for criminal penalties to apply. While each state may have additional elements for certain specific types of insurance fraud, the core elements often include:

1. Knowingly making a false or misleading statement;
2. The statement is made in connection with a claim or payment; and
3. The statement is material (in other words, the statement can impact the outcome of the claim).

Whether these elements are proven will depend on the evidence in a case, specifically, the evidence that could be admissible at a trial.

Talk to an Attorney About Your Insurance Fraud Case

Fraud crimes may result in long prison terms and enormous fines, depending on the circumstances surrounding the charges and the amount of money at issue. As such, the advice of qualified legal counsel can be invaluable. Contact a local criminal defense attorney, who can discuss the charges against you and the defenses you may have available to you.