Consequences of Auto Insurance Fraud

When you exaggerate injuries or damages after a car accident and make untruthful statements on your car insurance claim, you are guilty of committing auto insurance fraud. False insurance claims cost insurance companies billions of dollars every year and the result may be a hike in premiums for all customers. Before you decide to lie on your claims form or report an accident that never actually happened, make sure you're aware of the consequences of auto insurance fraud.

Here's what you need to know about the penalties and outcomes of car insurance fraud:

Types of Auto Insurance Fraud

Auto insurance fraud can be classified as either hard fraud or soft fraud. Hard fraud is when someone stages an accident or injury in order to file a claim with an insurance company. They may set up an accident scene or create their own injury and claim that the injuries and damages occurred from an auto accident. This type of fraud may be investigated by law enforcement agencies and does carry some legal penalties.

Soft fraud is when an individual falsifies information on the insurance claim form or lies to an insurance agent about the details of an incident. Another form of this type of fraud is to fake injuries or pain just to win a higher insurance settlement. In some cases, soft fraud is harder to detect but insurance claims investigators can use a variety of techniques to analyze the situation and determine whether information provided was falsified.

Penalties and Consequences of Auto Insurance Fraud

Knowing that there are some serious penalties and consequences of committing auto insurance fraud may make you think twice about falsifying a claim or going as far as staging an accident. Consequences of auto insurance fraud vary depending on the type of offense and the amount of insurance settlement funds that may have been disbursed already. If the insurance company files a lawsuit against the person who committed fraud and they are found guilty, the guilty party will be responsible for paying all damages owed in addition to court fees, legal fee, penalty charges and other costs.

Those guilty of hard fraud may face jail time and very heavy fines. In the event that a case is settled in or out of the court, the person guilty of committing fraud may need to deal with higher than average car insurance premiums or a denial of car insurance from any company in the future.

Sources:

CarsDirect.com - Auto Insurance Fraud Penalties and Consequences

Auto Insurance Compendium - Auto Insurance Fraud Explained

CarAccidentAttorneys.com - Consequences of Auto Insurance Fraud