Car Insurance Frauds Punishment- Must Read Before Claiming Auto Insurance In 2024

Car Insurance Frauds Punishment can range from fines to probation depending on the severity of the fraud.

Car insurance claims can be quite sensitive. Because one false detail about the claim and you can end up with car insurance fraud charges. But what is car insurance frauds punishment?

Well, we are about to find out. Because in this post on auto insurance frauds punishment, I am going to discuss types of car insurance fraud along with their punishments and everything related to them. So, stay with me till the end.

In This Post

Car Insurance Frauds Punishment

Car insurance fraud punishment depends on the type of auto insurance fraud a person is convicted of. However, in most cases, the punishment is a fine and probation. The fine can range from as low as $500 to as high as $15,000+.

But is jail a possibility?

Can You Go To Jail For Car Insurance Fraud Charges?

Yes, if the car insurance fraud is severe then jail is a possibility.

Usually, car insurance fraud charges end up in fines. However, if the fraud involves damaging someone else’s property or staging a fake accident for a high insurance payout then the convict can go to jail. To understand this better let’s look at car insurance fraud types.

Car Insurance Fraud Types

Depending on the severity of the fraud, there can be two types of auto insurance fraud. They are

Soft Car Insurance Fraud

Soft car insurance frauds are mostly lying to the insurance company to reduce the deductible and increase the insurance payout. These frauds may seem harmless. But when a user gets additional benefits out of it they start to do it more often.

Soft car insurance frauds are the most common type of auto insurance fraud. These frauds include

Hiding accident detail, exaggerating damage, and inflating the value of the damaged car parts.

Lying about the residential address to pay fewer insurance premiums is another common soft fraud.
Not informing the insurance company about the list of drivers in the household.

Hard Car Insurance Fraud

When a person fakes an accident by damaging other’s property or destroys the car to file for a complete payout claim then it’s considered hard car insurance fraud. They are quite rare and have a high penalty. These frauds include

Destroying the car completely on purpose to get the insurance money.
Harming other’s property to stage the fake claim.
Selling the car with the help of an accomplice and filing for a vehicle theft claim.

Now let’s look at some examples to understand them better.

Car Insurance Frauds Examples

Here are two examples of car insurance fraud

Soft Car Insurance Fraud Example

Imagine Mr. Smith has gone through a minor car accident. Now to get more insurance payout he consults with his mechanic and increases the bill. This is an act of soft car insurance fraud.

Hard Car Insurance Fraud Example

Suppose, Mr. Smith needs a lot of money. So, he calls on a friend to steal his car and sell it. After that, he calls the police and insurance company to file a stolen car insurance claim. This is clearly an act of hard car insurance fraud.

It’s time to look at the penalties for both types of car insurance fraud.

Auto Insurance Frauds Punishment

Here is a table of possible penalties for card insurance fraud

Fraud Type	Fine	Jail-time
Soft Car Insurance Fraud	$500-$15,000	Not common. But there can be probation.
Hard Car Insurance Fraud	$15,000+	Yes

What Happens If You Lie About Your Car Insurance?

Lying about your car insurance can lead to your policy being canceled, hefty fines, and even jail.

Lying on your car insurance claim is considered insurance fraud. No matter how small the lie is you can be charged with insurance fraud charges.

If the lie is caught then the insurance company will cancel your policy with no refund. Moreover, in case the matter is taken to court then you can end up with heavy fines and even jail depending on the severity of the fraud.

Can You Go To Jail For Not Paying Car Insurance?

Yes, jail is a possibility if you drive an uninsured car and end up in an accident. However, in most cases, driving an uninsured car leads to a fine.

In most states driving an uninsured car is illegal. Even if the car is new, you would require temporary insurance. However, if you drive an uninsured car and get caught then you would end up paying fines or even jail in some states.

How To Dispute A False Insurance Claim?

If you are charged with a false car insurance claim then you can hire a lawyer and dispute the claim.

On the other, hand if someone falsely accused you, then your need to talk with your insurance company thoroughly. They will conduct an investigation to find out about the issue. When they find out that you are speaking the truth, they will defend you and even assign you a lawyer to dispute the false claim.

How Do Insurance Companies Investigate Claims?

Insurance companies have dedicated teams to investigate claims. They are much more sophisticated than we think. Here is how they investigate

First, the team takes an interview of you the claim filer.

Then they talk with the police about stolen car insurance claims and other major claims.
They collect evidence such as video, location data, recordings, and witness statements from the accident or stolen site.
Lastly, they analyze the data and match it with your statement to come to a conclusion.

In Summary

Insurance frauds are much more common nowadays which makes insurance companies more careful when investigating a claim.

So, when claiming your car insurance always speak with honesty and never hide a detail no matter how small it is. Otherwise, you might end up with fines as high as $15,000+.