Last Updated on: 28th July 2023, 08:57 pm

With the recent poor economic conditions across the country, New York and Long Island insurance fraud claims are on the rise. As times get harder, more people who are otherwise law-abiding continue to look for ways to ease their financial and economic burdens. Desperation may lead people to questionable activities, such as insurance fraud.

What is insurance fraud?

The basic definition of insurance fraud is any intentional, duplicitous act designed to collect an improper payment from an insurer. This can be any type of fraud that involves an insurance company, usually through either inflated or false claims. People from all professions and walks of life may commit insurance fraud in a number of ways.

Insurance fraud is a crime in all fifty states. The damage caused by insurance fraud is that it costs insurance companies billions of dollars annually, with the Federal Bureau of Investigation (FBI) estimating the yearly cost of insurance fraud at over $40 billion. This type of fraud in turn drives up costs for both companies and consumers, with the FBI estimating that insurance fraud costs an average American family between $400 and $700 per year due to increased insurance premiums.

Commonly, people commit insurance fraud by either under-reporting essential information in an insurance claim case, exaggerating the estimates of damage, or making false claims. They may take actions such as misquoting income, lying on loan or insurance applications, falsifying income tax records, or claiming injuries or losses they did not incur.

Insurance fraud can also be committed by insurance companies, typically through either selling false or unlicensed insurance coverage to clients, or by stealing or diverting paid insurance premiums.

Types of insurance fraud

There are many different types of insurance frauds committed across the country. In general, the police and prosecuting attorneys will classify insurance fraud cases as either a “soft fraud” or a “hard fraud.”

In a soft fraud case, people who are normally honest and law-abiding may report slightly exaggerated or falsified information to their insurance companies to either maximize a legitimate claim, or file a false claim. While people often believe this is harmless adjusting, it is deemed a crime because this type of fraud raises everyone’s insurance rates overall.

A hard fraud occurs when an accident, injury, theft, or disaster is deliberately faked or staged in order to collect from insurance companies. Some people who commit hard fraud act alone, but in some cases larger groups of people will organize schemes designed to defraud insurance companies of millions of dollars.

A few more specific examples of types of insurance fraud can include:

• Automotive damage that resulted from a “phantom vehicle,” where the client claims that they have no information on the car that damaged their insured vehicle.
• Staging auto accidents, over-reporting collision damage, or making unrelated or unnecessary repairs to a vehicle under an existing accident claim.
• Health care fraud committed through either exaggerated injuries or using someone else’s identity to get treatment or secure health care benefits.
• Falsified slip and fall claims for personal injury settlements from businesses.
• Workers’ compensation fraud, either when employees submit falsified claims or employers deny the compensation benefits their employees are entitled to.
• Arson, or burning down property or possessions in order to collect the insurance payout.

What are the consequences of insurance fraud?

Insurance fraud is classified as a white-collar crime. This classification is for non-violent crimes that are committed in either business or commercial areas, which typically result in financial gain for the person committing the crime. Insurance fraud is among the most common types of white collar crime.

The penalties for committing soft fraud, which is usually considered a misdemeanor, can range from fines or community service to probation or jail time. In cases of hard fraud, which is a felony, penalties are strict and often involve several years of incarceration.

In order to prove fraud in court, the prosecuting attorney must be able to demonstrate that the person accused of fraud:

• Has knowingly made a misleading or false statement
• Made the statement in connection with an insurance payment or claim
• That the statement was ‘material,’ meaning that it had the ability to affect the outcome of the claim

What should I do if I’m charged with insurance fraud?

Most insurance companies are large and complex, with ample resources at their disposal to pursue claims of fraud. If you’ve been charged with any type of insurance fraud, or you believe you may be the victim of insurance fraud, it’s in your best interests to consult with an experienced criminal defense attorney to learn more about your rights and your options.

The Long Island insurance fraud lawyers at Spodek Law Group are highly experienced in dealing with all different types of insurance fraud cases. Our experienced, professional New York insurance fraud attorneys will help you understand the charges and deliver expert representation to help you solve your legal problems.