Falsely Reporting Theft or Damage to Property: Insurance Issues

Making a false insurance claim about theft or property damage is illegal, but people still do it. Why do some risk jail time to make a bogus claim? Let’s break it down.

Why People File False Claims

Money issues lead many down this road. If your car needs repairs or your home is damaged, filing an insurance claim means you don’t pay out of pocket. For some folks struggling to make ends meet, sticking an insurance company with the bill seems justified. “They’re rich, they can afford it,” people think.

Greed can also play a role. Some see making a false claim as an easy payday. Get your car “stolen,” file a claim, and collect a check. Cha-ching! Others exaggerate damages from a covered incident to pad the payout.

Opportunity and lack of ethics contribute too. It’s tempting for shady contractors to suggest inflating a claim to cover their fees. Ditto for sketchy body shops padding repair bills. And for a few, it’s a game to outsmart the insurer.

Common Schemes

False theft reports top the list of dodgy claims. Staging a phony carjacking or burglary doesn’t take much effort. Just ditch the car somewhere or hide the “stolen” items at a friend’s place.

Vandalism and other property damage also offer easy ways to mislead. Smash your own car windows, spray paint a wall, or bust a hole in the roof. Without proof, insurers often have to take your word.

Exaggerated injury claims plague auto insurers. Faking whiplash or back pain from a fender-bender is simple. Doctors can be duped, and soft tissue injuries are hard to disprove. These phantom ailments really drive up claim costs.

Why It’s a Bad Idea

Beyond being illegal, false claims are just a bad idea all around. Let’s count the ways:

• You’ll get caught. Insurers have whole departments to sniff out fraud. Dumping your car or hiding valuables won’t fool them for long.
• You’ll face criminal charges. Filing a false insurance claim is a felony in most states. That means big fines and years in prison.
• You’ll get dropped. Once an insurer discovers your scam, they’ll cancel your policy so fast your head will spin. Good luck finding coverage after that.
• You’ll owe back the money. Not only will your claim get denied, but you’ll have to repay any funds already collected. So that brilliant scam will cost you big.
• It raises rates for everyone. Insurance fraud costs U.S. families an extra $400-$700 per year through increased premiums. Way to stick it to all the honest folks.

Specific Laws

Falsely reporting theft, damage, or injury violates both state and federal statutes. The exact charges vary by jurisdiction, but often include:

• Insurance fraud
• Filing a false police report
• Perjury
• Mail or wire fraud if using the postal service or internet

Prosecutors tend to pursue the most serious applicable offenses. Given the premeditation involved, these crimes often face felony rather than misdemeanor charges.

States like California, Florida, and New York aggressively prosecute insurance fraud. Under California Penal Code 550, making false insurance claims over $950 may be charged as a felony. Florida Statute 817.234 imposes steep fines and up to 30 years imprisonment for various frauds.

Legal Defenses

Fighting a false claim allegation isn’t easy, but some defenses are available:

• Lack of intent – The accused may argue they didn’t knowingly or intentionally deceive the insurer. Perhaps they misunderstood what damages were covered.
• Claim was legitimate – The accused can contend the claim was truthful and accurate, with no effort to defraud. The insurer must prove intent and material deception.
• Unknowing participant – If others orchestrated the scam, the accused may claim they were an unknowing participant, duped by the true fraudsters.

These tactics force the prosecution to definitively prove intent to defraud, rather than filing an erroneous claim by mistake. Securing a conviction requires overwhelming evidence of deliberate deception.

Bottom Line

Tempting as it seems, insurance fraud is a risky venture with serious consequences. Honesty remains the best policy when filing any claim. If money is tight, consider asking the insurer for a payment plan rather than fabricating damages. It’s not worth the fines, jail time, and financial havoc of getting caught committing fraud. Play it safe and keep your record clean.