If you are thinking of committing insurance fraud in order to obtain money that you are not entitled to – then you are planning on committing a felony or a crime that is punishable by fine, jail, or prolonged incarceration. There are still other consequences of making false insurance claims, and these will be examined shortly.
You will be guilty of committing insurance fraud if you engage in any of the following:
- Withhold facts or give incorrect information to your insurer
- Stage an auto accident or health crisis to claim insurance payment
- Register an insurance policy under another person’s name
- Any other factual misrepresentations to claim payments
False insurance claims can be perpetrated under any type of insurance scheme and these include healthcare, automobile, life, marine, travel, and property among others. Whatever your insurance coverage is, you will be liable if discovered to have made false claims to obtain insurance cashouts.
So what happens if someone makes a false insurance claim? Well, here are some of the consequences of insurance frauds:
Your Claim May Be Denied
If your insurance provider detects that you have exaggerated certain aspects of your claim to gain targeted financial benefits, they may deny your claims and you will be at the losing end. They may not only deny paying you any lump sum, they will also deny paying for any medical injuries connected to your false claims.
Your Insurance Policy May Be Revoked
If your insurer discovers that you have lied in trying to file a claim, they are at liberty to deny your claim, cancel your policy, or even categorize you as a high-risk policyholder. It will be a tragedy to have your policy canceled on account of fraudulent insurance claims, and it is equally bad to recategorize you as a high-risk case.
Your Premium Can Increase
Moving you to a high-risk category will increase your premiums significantly, and switching to other insurance providers will not help you in this case. In some cases, high-risk policyholders have had their premiums increase by up to 70% and this is not something anyone would want. You will have the same problem with other insurers because they will know what you did earlier.
You May Be Jailed
There are legal consequences to exaggerating insurance claims. Whether you deny your role in an auto accident or falsify the records about your lifestyle, you will have yourself to blame when you are found out.
Your insurance provider will likely inform the police and you will be picked up and charged to court; upon conviction, you may be fined as much as $10,000 or more depending on the severity of the felony/crime and the US state you are located; and you may be jailed for 2-10 years. You will also be made to refund the money if you had been paid already.
You May Lose Out On Societal Benefits
If you are charged with the crime of perpetrating insurance fraud, you may suffer for a long time and lose out on many societal benefits. For instance, you may not be able to secure any other insurance coverage throughout the United States; and you may be denied health and financial services since you will be considered a criminal who may re-offend. The stigmatization may also affect your family members and impact their lives in other areas.
The Elements That Will Nail You In A False Insurance Claim
If your matter goes to court and you are arraigned for a fraudulent insurance claim, the prosecutor will try to nail you on three major grounds.
- That you intentionally planned to defraud an insurance company; and that you acted on your plan to commit the fraud.
- That you deliberately acted to obtain financial benefits from an insurance company by lying to the insurance provider, making misleading statements to a medical expert in relation to a policy, and to lawyers in relation to an insurance claim.
- That the exaggerated claims you made are material to dishonestly benefitting from a false insurance claim. This means the falsehood you committed is material to obtaining insurance payments by crook.
False insurance claims are considered a crime under federal law because it affects the entire society. If an insurance provider gets hit by fraudulent claims, they will pass the buck to everyone by increasing their premiums to cover for their loss. Insurance fraud can also be used to fund terrorism, money laundering, drug gangs, and other social vices. So the consequences of false insurance claims go beyond punishing the criminal, they extend to the entire society and that is why the government takes it very seriously.