California has recorded a significant increase in auto insurance fraud cases in the past few years. In response, both state and federal law enforcers have intensified their efforts to combat this crime. However, this aggressive approach has unfortunately led to unintended consequences. Innocent individuals have been caught in the crossfire due to misunderstandings or false accusations.

Auto insurance fraud can take many forms, such as making false statements to obtain illegal insurance payouts or filing multiple claims. If you’ve been accused of fraudulent activities related to auto insurance, our team at Monterey Criminal Attorney is available to assist you. Regardless of the details of your case, getting in touch with our legal experts can help you find the best possible solution for your situation.

An Overview of Auto Insurance Fraud

Auto insurance fraud, or car insurance fraud, generally refers to the act of making false, fraudulent, or exaggerated claims to your auto insurance company regarding damage to your automobile, theft of your automobile, or injuries sustained in an accident. People such as attorneys, physicians, injured parties, and drivers could be involved in auto insurance fraud. There are several types of auto insurance fraud, including:

Soft Insurance Fraud

Soft fraud is considered a less serious violation compared to physical fraud. It typically involves cunningly exploiting an incident for personal gain. For instance, if you exaggerate the extent of your injuries to obtain more settlement than you merit, you are committing a soft fraud felony. Soft fraud can be challenging to detect, especially when it involves back, head, or neck problems, which is why some individuals find it easy to engage in such behavior.

The Frequency of Car Insurance Fraud

The most common type of vehicle insurance fraud involves exaggerating the actual injuries sustained in a regular automobile accident. Additionally, staging auto theft and submitting claims for non-existent injuries are two other common forms of auto insurance fraud.

Hard Insurance Fraud

This kind of fraud is considered more serious and carries harsher penalties compared to soft fraud. Instances of hard fraud can arise from intentional auto accidents, planned carjackings, or well-devised schemes aimed at defrauding auto insurance companies. However, cases of hard fraud are relatively fewer when compared to cases of soft fraud.

Types of Car Insurance Fraud

California ranks at the top for vehicle insurance fraud based on the Coalition Against Insurance Fraud (CAIF) findings. This type of fraud can take on various forms and poses a significant challenge for the auto insurance industry. These include the following:

Car Accidents That Are Staged

The National Insurance Crime Bureau (NICB) reported a shocking 102% increase in crashes that were staged across the United States between 2008 to 2011. The bureau also provided details of various instances of these contrived crashes:

  • Drive down the road. When the victim's car turns left, another driver, known as the fraudster, alerts the victim to do the same. The fraudster intentionally crashes their vehicle into the victim's car.
  • Swooping and squatting. This rear-end collision involves two automobiles, one vehicle in front and one behind, with a third car trapped in between.
  • Panic stop. When a dishonest motorist in front suddenly applies the brakes, it can result in the vehicle behind them getting rear-ended. Following this, the negligent motorist then informs their car insurance company of their intention to fake the collision.

Counterfeit Airbags

According to the US Department of Transportation, in the event of an automobile accident, nearly one million airbags will be deployed. These airbags are mandatory and can save up to 45% of lives. However, in an attempt to make money, some repair firms either replace these airbags with counterfeit ones or improperly dispose of them nearby.

Your insurer will still cover the repairs, even though you were unaware that the mechanic inserted odd items. However, it is important to note that in this situation, the vehicle mechanic is defrauding the insurance company.

Fraudulent Insurance Companies

While insurance brokers do provide comfort in the event of an accident, it is unfortunate that a significant portion of them are dishonest. According to the CAIF, unsuspecting automobile owners have had their premiums stolen by dishonest insurance salespeople. It is disheartening to discover, in the case of a real automobile catastrophe, that the premium payments never reached the insurer.

Definition of Automobile Insurance Fraud Under California Law

The following is a list of several definitions of vehicle insurance fraud based on California law:

Abandoning or Destroying a Vehicle

For some reason, individuals abandon their cars. However, legally, you cannot later pursue your insurer for reimbursement. According to PC 548, it is against the law to deceive your insurance company or to leave your insured automobile unattended, conceal it, or destroy it while it’s covered against theft or damage.

Engaging in the deceptive practice of misleading your insurance provider to receive financial compensation is commonly referred to as fraud. This unethical behavior not only harms the insurance company's assets, legal rights, and financial stability but can also have legal consequences for you.

It's important to note that even if your insurer doesn't suffer any financial losses, you can still be charged with auto insurance fraud if you deliberately damage your vehicle after committing a crime. Additionally, causing damage to someone else's car can still result in penalties and legal repercussions.

For example, if you were to steal your partner's automobile and spray paint it to commit insurance fraud without the owner's knowledge, it would be you who would face the charges of auto insurance fraud, not the automobile owner. If your insurance company or law enforcement were to find out that you painted the vehicle, the consequences would be on you.

Fraudulent Claims

Several additional statutes in the California criminal code pertain to vehicle insurance fraud. It’s illegal to make fraudulent claims regarding the theft, damage, or alteration of a vehicle, as stated in PC 550a4.

According to PC 550a4, the following constitutes vehicle insurance fraud:

  • The submission of fake or fraudulent claims for settlement due to theft, damage, or alteration of an automobile or its parts.
  • Filing false claims to scam an automobile insurance company.

Unlike PC 548, the fraudulent claim statutes don’t require you to suffer financial loss to make a claim. For instance, if you falsely claim that there were no pre-existing damages to your car, even though it has a shattered back bumper from your previous car crash, and another driver rear-ends you, causing additional damage, you would be violating PC 550a4.

You could face legal consequences only if you knowingly make a false claim. Additionally, there could be minor, invisible dents on the back of your car. However, if you get into a rear-end collision and discover the dents for the first time, you are not breaking the law by filing an insurance claim.

Multiple Claims

Numerous drivers have intentionally violated California PC 550, which states that it is unlawful to:

  • Making multiple claims to one or more insurance companies for the same loss.
  • Filing two claims that are similar for a single harm to collect money falsely.

Intentionally Causing the Accident

Both insurance companies and law enforcement deem it necessary to identify a staged collision. According to California PC 550a3, intentionally being involved in a car collision to seek fraudulent compensation claims renders you guilty.

The following situations constitute fraud:

  • The vehicle accident happened directly due to your actions.
  • If you hadn't been involved, the vehicle collision could have been avoided.

False Statements

Committing vehicle insurance fraud by making fake claims is possible. The following conduct results in a violation of California PC 550:

  • Providing written or oral comments to oppose or support vehicle insurance fraud, based on the understanding that the allegations regarding your automobile accident are untrue.
  • Preparing written or spoken arguments in favor of or against vehicle insurance benefits, even if one is familiar that the arguments contain factual errors or are dishonest, deceptive, or misleading in any way.

Creating false written or spoken statements to deceive an insurance company in a jurisdiction other than your own is considered insurance fraud. For example, if you reside in California, you are not allowed to obtain auto insurance from a company based in another state.

Referring to or Soliciting the Business of Auto Insurance Fraud

There are multiple ways in which employees and business owners in the car-selling industry could engage in illegal automobile insurance fraud offenses under California law. Car company owners engage in fraudulent activities when they advise, endorse, or accept another insurance company for someone who is attempting to deceive an insurer.

Auto repair business owners should be aware that if they're caught providing kickbacks or splitting profits with auto insurance adjusters, brokers, or agents in an attempt to persuade policyholders to purchase replacement components covered by insurance, they could face legal repercussions for fraud.

Potential Penalties for Automobile Insurance Fraud

The severity of punishment for California vehicle insurance offenses varies depending on the specific law violated. Penalties for intentionally causing damage to a car to deceive a firm are distinct from those for engaging in fraudulent auto insurance activities.

Punishments Intentionally Causing a Car Accident

According to California PC 550a3, staging an automobile accident to deceitfully obtain reimbursement from an insurance company is considered a felony offense. If you violate PC 550a3, you could face consequences such as formal probation, a punishment of no more than $50, 000 in fines, 2, 3, or 5 years in county jail, or a fine double the amount of money you received through your vehicle insurance fraud.

In California, intentionally causing a car crash to deceive auto insurance is a felony that carries additional penalties, including:

  • If you’ve been convicted of more than 2 felonies for breaking PC 550a3, you could face an additional five years in prison.
  • There will be an additional 2-year jail sentence for every individual who is injured as a result of a staged accident. This improvement applies to minor injuries as well.
  • If, after your manufactured collision, you seriously hurt someone else, an additional three years will be added to your sentence.
  • Any felony crime related to vehicle insurance fraud can result in an additional two years of jail time under PC 550 and PC 548.

Penalties for Fraudulent Claims or Multiple Claims

California PC 550a4 applies to the filing of a false claim, while California PC 550a2 applies to the filing of multiple claims. Violating any of the two laws could result in criminal charges. If convicted, you could face a maximum sentence of five years in county jail, formal probation, a maximum fine of fifty thousand dollars, or even double the amount obtained through deceptive means in fines.

However, violating PC 550a4 is considered an offense. The prosecution has the discretion to file either felony or misdemeanor charges against you in this case. If convicted of a misdemeanor, you could face a maximum sentence of one year in prison or a fine of $10,000 or less.

Any conviction for a crime that involves a violation of PC 548 or PC 550 carries an additional two-year jail term. Moreover, if you have a prior record of felonies, you are not eligible for felony probation and will instead serve jail time.

Penalties for Abandoning or Destroying Your Car

If you intentionally abandon or destroy your vehicle to make fraudulent insurance claims, you could face charges for the crime. Breaking this law can result in felony charges, with a potential fine of $50, 000 or less, and a jail sentence ranging from 2 to 5 years in jail.

Alternatively, the jury could choose to convict you to formal probation instead of jail time. Additionally, for each criminal offense, the statute imposes a 2-year penalty. For example, there are separate punishments for violating PC 548 and PC 550 respectively.

Penalties for False Representations

Providing misleading information, including making fraudulent declarations, is a violation of California PC 550b (1)–(4). Consequently, if you are convicted of creating false representations, the prosecution could pursue either a felony or misdemeanor case against you. The specific charges you will face depend on the elements of your offense and your criminal background as a defendant.

Under California law, there are similar penalties for making false representations, pursuing multiple claims, and making fraudulent claims.

If you are accused by the prosecution of breaking PC 550b(1)–(4) as a misdemeanor, the potential punishments will vary. Possible penalties include a hefty fine of ten thousand dollars or less, a maximum sentence of one year in prison, or summary probation.

Penalties for Taking Kickbacks from Vehicle Repair Shops

The penalty for breaking California PEN 551 is determined by the amount earned fraudulently. According to legal regulations, accepting bribes for less than $950 is considered a minor offense. If found guilty, the maximum punishment is a thousand-dollar fine or a maximum six-month prison sentence.

If the kickback involved significant sums of money greater than $950, your offense qualifies as a wobbler. In such cases, the jury could convict you to a maximum of one year in jail, a maximum fine of $1, 000, or both if the misdemeanor offense involves more than $950.

For a felony conviction, you could serve sixteen months, 2 years, or 3 years in county jail. In addition, the jury has the authority to impose a hefty fine of up to ten thousand dollars.

Penalties for Soliciting, Referring, or Accepting Automobile Insurance Fraud Business

Under California law, dealing with a car owner who intends to commit car insurance fraud at a dealership could land you in legal trouble. This violation is classified as a 'wobbler' offense under PC 549, which means you could potentially face charges of auto insurance fraud yourself.

If you are found guilty of violating PEN 549, you could face consequences such as felony probation, a hefty fine of not more than fifty thousand dollars, or double the amount of money you gained from vehicle insurance fraud. Additionally, you could be sentenced to spend sixteen months, 2 years, or 3 years in jail.

If you are charged with a misdemeanor, the court could sentence you to a maximum of one year in prison, a fine of no more than one thousand dollars, or misdemeanor probation. However, if you commit car insurance fraud twice or more, you will face felony charges.

Legal Defenses Against California Automobile Insurance Fraud Allegations

California takes vehicle insurance fraud charges seriously. If there is any indication that you could have committed fraud, you will be closely scrutinized. However, there is also a possibility of being falsely accused of car insurance fraud. Your criminal defense lawyer can use these legal defenses to refute the charges.

  • You Did Not Intend to Commit Fraud After Your Actions

The prosecutor needs to prove that you were aware of making a false claim on your motor insurance to defraud the company. However, it's possible that you made an innocent mistake that your insurance provider reported as insurance fraud to the authorities without your knowledge.

To prove your innocence and have the allegations dropped or enter a not-guilty plea, it is crucial to hire an experienced criminal defense lawyer.

  • Your Car Damage Claims Were Accurate

If an insurance company discovers that you fabricated allegations for damages caused to your car following an accident, they could notify law enforcement. Even if the motor insurance company is at fault, your defense lawyer will thoroughly review all the details and, if proven true, could be able to have the charges dropped.

  • There Isn't Enough Proof Against You For Automobile Insurance Fraud

Establishing cases of car insurance fraud can be challenging, particularly for the prosecution, due to complicated procedures. The trial often faces difficulties in presenting sufficient evidence to the court. Additionally, when there are conflicting witness testimonies, circumstantial evidence, or complex documentation processes, the burden of proving your guilt becomes even more demanding.

Crimes Related To Car Insurance Fraud

The following charges are closely connected to California car insurance fraud:

Fabricating a Vehicle Theft Report

Making false allegations of vehicle theft is not only unlawful but also strongly linked to car insurance fraud. If you falsely report your automobile as stolen to see if your insurance covers theft, you are in violation of California PC 550 and California VC 10501. It's important to be aware of the legal consequences associated with such actions.

As a misdemeanor, fabricating a vehicle theft report carries a potential six-month prison sentence for the first offense or the same penalties as PC 550.

Health Care Fraud

Another common crime is California healthcare fraud, which involves submitting fictitious invoices to an insurance company for medical services that were either never provided or were more expensive than the actual services rendered at a facility.

Committing healthcare fraud in a manner comparable to vehicle insurance fraud is considered a crime under California PEN 550.

Every morning, there are reports of real or fake traffic incidents. California law prohibits making false claims to insurance companies for both vehicle and health benefits. If you are found guilty of these offenses, you will be penalized for both accounts.

Arson

Intentionally starting a fire is against California PC 451. It is also against the law to set your automobile on fire and make false claims to your insurance company to receive money. The act of arson is classified as a felony offense. If found guilty of violating PEN 451, you could face a cash fine of up to fifty thousand dollars or double the amount paid by insurance.

Another potential consequence is a prison sentence in jail. The length of the sentence depends on the severity of the offense, ranging from as little as 16 months to a maximum of three years.

Contact a Monterey Criminal Defense Lawyer Near Me

If you’re facing accusations of auto insurance fraud, it is crucial to seek legal counsel immediately. A criminal defense attorney can assess your case and develop an appropriate defense plan tailored to your situation. Having competent legal representation could lead to the reduction or dismissal of your charges. If you would like to discuss your legal situation with one of our attorneys at Monterey Criminal Attorney, call 831-574-1791, and we will be happy to assist you.