Auto Insurance Fraud

Insurance fraud is a felony under California law. It impacts insurers and policyholders. You would be guilty of the offense if you knowingly presented false or misleading information to receive benefits for which you were not eligible. Some of the more common types of auto insurance fraud are staging accidents, submitting false medical bills, reporting a stolen car with fraudulent intent, and exaggerating vehicle repair costs.

California law treats these offenses harshly. A conviction for auto insurance fraud can result in severe penalties, including incarceration, fines, and probation. Even first-time offenders can face felony charges depending on the circumstances. Auto insurance fraud cases often involve complex investigations and aggressive prosecution.

Therefore, you will need expert legal insight if you or a loved one faces auto insurance fraud charges in Los Angeles, CA. At CCLG: Los Angeles Criminal Attorney, we will offer the guidance and representation you need to secure a favorable case outcome.

An Overview of Auto Insurance Fraud in California

Auto insurance fraud is a serious crime under California law. It costs the insurance industry billions every year. It also drives up premiums for honest drivers. The state has tough laws to punish fraud and protect consumers. Common forms of auto insurance fraud include:

False Insurance Claims (Penal Code § 550(a)(4))

You violate California PC 550(a)(1) when you submit a claim for losses or damage that did not happen or exaggerate the damage. Before you face a conviction under this statute, the prosecution must prove these elements:

You submitted a claim. The prosecution must prove that you submitted a claim to an insurer.
The claim was false. You must submit a claim to an insurer when seeking compensation for damages. However, you commit auto insurance fraud if the claim contains false or misleading information.
Knowledge. You must have known that the claim you presented to the insurer was false at the time of submission.
Intent to defraud. The prosecution must prove that you acted intending to defraud when establishing your liability under PC 550(a)(1).

The law does not require the insurance company to pay. Just the act of submitting the false claim is enough. Common examples of false insurance claims include:

Claiming damage from an old accident as if it were new is a typical example of false insurance claims.
Reporting a fake accident to collect money.
Asking for more than what you lost in an auto insurance claim.

Staged Accidents California Penal Code § 550(a)(3)

Staging a crash to collect insurance money is a crime. You could face an arrest and charges for auto insurance fraud if the accident meets the following requirements:

Deliberate action. You must have planned the accident or caused it on purpose.
Active participation. You will be found guilty under these statutes if you participate in setting up or carrying out the crash.
Insurance purpose. You must have participated in the staged crash to submit a false insurance claim.
Intent and knowledge. The prosecution must prove that you intended to collect money from the insurance company.

Examples of PC 550(a)(3) violations include:

Purposely crashing your car and faking injuries.
A driver suddenly stops to cause a rear-end crash.
Groups organize fake collisions with fake passengers.

A planned crash is fraudulent, even when it looks real.

Inflated Vehicle Repair Bills

This fraud involves lying about repair costs to receive more money from the insurer than the repairs cost. The elements that the prosecution must prove to establish your liability under this statute include:

You submitted an invoice or estimate. This occurs when a repair shop or car owner sends a written estimate or bill to the insurer.
False charges. The bill submitted to the insurer must have contained exaggerated services, parts, or labor costs.
Knowledge of falsity. You must have known that the bill you presented was false.
Intent to deceive. The prosecution must prove that you acted with fraudulent intent.

Under these circumstances, the repair shop and the car owner can face charges for insurance fraud.

Examples of this offense include:

Charging for new parts but using old ones.
Listing non-existent repairs
Increasing labor hours or parts prices dishonestly.

Damaging or Abandoning a Vehicle

Under California Penal Code § 548, lying about vehicle theft or damage to an insurance company is unlawful. The offense involves hiding or destroying the car, then claiming it was stolen. Examples of PC 548 violations include:

A car owner dumps or burns their car and reports it stolen.
Someone sells their car and later claims they lost it
A person hides their car from repossession and reports it as missing.

The elements of this offense are:

You disposed of or hid the vehicle. The prosecution must prove that you hid or damaged your vehicle.
You made a false theft report. Hiding or destroying your vehicle is not enough to convict you of fraud. The prosecution must show that you made a false theft report to the police or insurance company.
Ownership interest. You cannot be charged with auto insurance fraud on another person’s vehicle. You must have ownership of the car or a financial interest in it.
Intent to defraud. You must have acted with the intent to defraud the insurance company.

Fraud lies in the false claim and not the actual loss of the vehicle. Therefore, you cannot face criminal charges if you do not make a false report.

California Penal Code § 551 – Accepting Kickbacks from Auto Repair Shops

California Penal Code § 551 targets individuals who direct, refer, or steer clients to insurance-related services in exchange for compensation. This auto insurance fraud applies to medical providers, attorneys, and others orchestrating or benefiting from such referrals.

Violations of the statute may involve kickbacks, bribes, or illegal referral fees. To convict you under Penal Code § 551, the prosecution must prove:

You solicited, accepted, or paid compensation for referring or steering a person to a service provider like a doctor, lawyer, or auto repair shop.
The services are connected to an insurance claim. A link between your referral and auto insurance benefits must exist for the prosecution to charge you with this offense under auto insurance fraud laws.
You made the referral or arrangement with the intent to defraud. The prosecution must prove your intent to defraud the insurance company.

Fraud in Insurance Applications

You violate California Insurance Code § 1871.2 when lying on an auto insurance application for cheaper rates or broader coverage. Examples of PC § 1871.2 violations include:

Failing to list a teen driver in the home.
Using a false address to get lower premiums.
Hiding past accidents or tickets.

You will be found guilty of auto insurance fraud under this statute if the prosecution can prove that:

You submitted an insurance application. The first element that the prosecution must show is that you submitted an insurance application. The statute applies to new applications and renewals.
You provide false or incomplete information. You must have misrepresented or left out some facts in the application. These might include names of drivers, driving history, or where the car is kept.
You made a material misrepresentation. The false information you provided must be significant enough to affect how much the policy costs or whether it is offered.
Knowledge and intent. The prosecution must prove that you knew the falsehood of the information you preserved and intended to benefit from it.

Insurance companies rely on honest applications. Any lie that affects their decision can count as fraud under California law.

Legal Penalties for Auto Insurance Fraud in California

Auto insurance fraud in California is a serious offense charged under the Penal and Insurance Code. A conviction for this offense attracts severe legal penalties. The nature of the penalties will vary depending on the specific statute.

Penal Code § 550(a)(1)

If you submit a false claim for auto damage, you can be charged under PC § 550(a)(1). A violation of this statute is a felony punishable by:

2, 3, or 5 years in jail
A fine of up to $50,000 or twice the amount of the fraud, whichever is greater.
Formal probation.
A conviction is a strike under California’s Three Strikes Law if it involves significant bodily injury.

If the total fraud amount is less than $950, the prosecution can file a misdemeanor charge under Prop 47. However, you should not have a serious criminal record.

Penal Code § 550(a)(3)

Deliberately causing a crash to collect insurance compensation is also a felony. The statute punishes all individuals involved in staging the accident. The penalties for a conviction under this statute include:

2, 3, or 5 years in jail.
A fine of up to $50,000 or twice the fraud amount
Additional penalties if a third party suffers an injury or dies in the staged crash.
Possible license suspension if you are a repair shop owner or insurance broker.

If you were part of a ring or group that staged crashes, you may also face conspiracy charges, adding more prison time.

Penal Code § 550(a)(4)

Submitting fake or inflated repair bills is also a felony under PC § 550(a)(4). The offense is punishable by:

2, 3, or 5 years in jail.
Up to $50,000 in fines, or double the fraud, whichever is greater.
Professionals like mechanics or shop owners may face loss of license or state business sanctions.

If the fraud is under $950 and is a first offense, the case may qualify as a misdemeanor. In this case, you could face up to one year in jail.

Penal Code § 548

Destroying or hiding a car and claiming that another person stole it is a felony offense. After your conviction under this statute, you could face the following penalties:

2, 3, or 5 years in jail
A fine of up to $50,000, or double the fraud amount
Possible enhanced sentence if the act was part of a pattern of fraud
If the car was leased or financed, you may also face civil lawsuits from the lenders.

The court may consider intent and financial hardship during sentencing. Therefore, it pays to have the guidance of a competent criminal defense lawyer.

Penal Code § 551

PC 551 relates to agents or adjusters receiving unreported or illegal commissions from repair shops working with fraudulent claims. If the kickbacks total $950 or lower, you will face charges for a misdemeanor punishable by up to 6 months in jail or a fine of up to $1,000.

You could face wobbler charges if the kickbacks total $950 or more. A wobbler attracts a felony or misdemeanor, depending on the circumstances. A felony in this case is punishable by 16 months, 2 or 3 years in jail, a fine up to $10,000, and probation. You could face up to 1 year in jail, a $1,000 fine, or both for a misdemeanor.

Insurance Code § 1871.2

Lying on an insurance application is fraud. The penalties for auto insurance fraud in applications include:

16 months, 2 years, or 3 years in jail
A fine of up to $10,000.
Possible denial of future insurance coverage

If the fraud involved a scheme or multiple false applications, you could face additional felony conspiracy charges.

Collateral Consequences of a Conviction for Auto Insurance Fraud

The consequences of a conviction for auto insurance fraud go beyond incarceration and fines. After your conviction, you can face the following additional consequences:

Restitution

In every auto insurance fraud case, courts require the defendant to pay restitution. This means repaying the insurer for any money they lost due to the fraud. Restitution is separate from fines and must be paid in full, even if you are not sentenced to jail or prison.

Probation Limits

Probation may be available for first-time or misdemeanor offenders facing charges for auto insurance fraud. However, prior felony convictions, especially under Penal Code 548 or 550, make probation unlikely. Judges also deny probation if the fraud involved planning, injury to others, or a high dollar amount.

Sentence Enhancements

If the fraud resulted in injury during a staged accident, you may face extra time behind bars. The court will impose 2 years in prison for each injured person and 3 years if someone suffers a serious injury. Prior convictions under fraud laws also bring 2 to 5 extra years.

Permanent Criminal Record

Insurance fraud convictions stay on your record for life. This can affect employment, licensing, and even immigration status. Although you can expunge the record and ease the impact, you must meet the eligibility criteria for the post-conviction relief.

Professional Consequences

Healthcare workers, insurance agents, and licensed professionals could lose their licenses following a conviction for auto insurance fraud. Usually, boards take disciplinary measures following a conviction for fraud.

Immigration Risks

Insurance fraud is considered a crime of moral turpitude. The offense can trigger immigration consequences under federal law. Non-citizens convicted of fraud may face deportation or inadmissibility.

Legal Defenses Against Charges for Auto Insurance Fraud Under California Law

The repercussions for an individual charged with auto insurance fraud are significant. A conviction for this type of offense can result in jail time, fines, and a lifelong criminal history. But being accused does not equal being guilty. Having the correct legal representation can make the difference in your case outcome. Possible defenses that might apply to your situation are:

Lack of Intent to Commit Fraud

Intent is a key part of auto insurance fraud. The prosecutor must prove that you intended to defraud the insurance company. You may avoid a conviction if you prove you made a mistake or misunderstood the claim process.

For example, if you believed the damage was covered, but it was not, seeking compensation based on that fact does not constitute fraud. A good lawyer can show no criminal intent, just an honest error. You can use the lack of intent defense in complex claims or confusing insurance policies.

False Accusations

Not every insurance fraud allegation is factual. You might sometimes even fall victim to false accusations. Such an accusation may result from a miscommunication, an error in the paperwork, or someone covering their fault, trying to pin the blame on you.

Sometimes the fraud is committed not by you but by the repair shop or someone else, and you face an accusation simply because your name was on the claim. A defense attorney can obtain evidence to prove that you were not involved in or did not know about the fraud.

Insufficient Evidence

The state must prove beyond a reasonable doubt that you committed auto insurance fraud. Your lawyer can argue that the evidence is insufficient to convict you. This defense works best when the case is based on circumstantial evidence or inconsistent witness statements.

Mistaken Identity

You might face charges for auto insurance fraud because someone else used your identity. Identity theft is common, even in insurance fraud cases. For example, a dishonest mechanic or accomplice could use your information to file a fake claim. You are not guilty of the offense if someone else uses your name without your knowledge. Your attorney can investigate the records and prove that someone else committed the fraud using your identity.

No Actual Fraud Occurred

In some cases, some incidents reported as fraud do not meet the legal standard. You may have submitted a legitimate claim that the insurance company disputes. Just because an insurer denies a claim does not make it fraudulent. If your lawyer can show the claim stemmed from real damages or injuries and that you acted in good faith, the fraud charge may not hold.

Entrapment

Entrapment happens when law enforcement tricks or pressures someone into committing a crime they would not have committed alone. Although rare in insurance fraud cases, it can occur during sting operations or investigations. If an undercover investigator pushes you into the act, you can use entrapment as a valid defense. Your lawyer must show you were not predisposed to commit the fraud and only did so because of the pressure.

Offenses Related to Auto Insurance Fraud

When you face charges for auto insurance fraud, the prosecution can introduce charges for the following related offenses:

Penal Code 451 – Arson Related to Auto Insurance Fraud

CPC 451 makes it a felony to willfully and maliciously set fire to property, including vehicles. In some insurance fraud schemes, a person may intentionally burn their car to claim it was stolen or destroyed in an accident. It allows them to collect insurance money unlawfully.

Using arson to support a false claim can result in arson charges and auto insurance fraud. Arson for financial gain aggravates and may lead to harsher penalties. A conviction can result in prison time, fines, and a permanent criminal record.

Vehicle Code 10501 VC – False Vehicle Theft Report

Vehicle Code 10501 makes it a crime to knowingly file a false police report stating that a vehicle was stolen. The offense applies in staged auto theft insurance scams. The goal is to collect money for the care. Violations under this statute can attract misdemeanor or felony charges, depending on the case.

A felony conviction for the offense will see you spend sixteen months to two or three years in jail. A misdemeanor conviction, on the other hand, will result in a jail sentence of up to six months.

Find a Competent Criminal Defense Lawyer Near Me

You could be arrested and charged with auto insurance fraud if you knowingly make false or misleading statements with the intent to receive an insurance payment. Different statutes under California law address varying forms of auto insurance fraud. Facing arrests and charges for auto insurance fraud can quickly become overwhelming.

In addition to criminal penalties, those convicted may face long-term consequences. These include probation, mandatory restitution, loss of professional licenses, and difficulty finding future employment. Non-citizens may also face immigration problems, including deportation. If you are under investigation or facing charges, seeking legal guidance early in the process can make a significant difference in the outcome of your case.

At CCLG: Los Angeles Criminal Attorney, we understand the impact of a conviction for auto insurance fraud on your freedom and future. Our skilled lawyers will help you build a solid defense to fight your charges and avoid a conviction. Contact us at 323-922-3418 from Los Angeles, CA, to discuss your case.