False Claims by Insured
False Claims by Insured
Various statutes prohibit the submission of false or fraudulent claims or evidence in connection with insurance claims. A person who commits such fraud may be subject either to civil liability to an insurer or to prosecution for a crime.
Both the act creating the fraudulent loss and the submission of the fraudulent claim may be separate crimes. For example, the commission of arson and the filing of false information in support of an insurance claim relating to the fire are separate offenses.
Aiding and Abetting and Conspiracy
Those who aid and abet or conspire with an insured to submit a fraudulent claim may also be guilty of a crime.
A person may be guilty of attempted insurance fraud if he takes a substantial step toward the commission of the insurance fraud but does not complete the offense.
A person’s intent to defraud must be proven in order to convict him of submitting a fraudulent insurance claim. Generally, it must be shown that the person submitted a false claim knowingly and willingly rather than merely negligently or inadvertently.
The person’s intent may be demonstrated with direct or circumstantial evidence. Some examples of circumstantial evidence include a pattern of similar losses incurred by the insured, the purchase of additional insurance immediately before the loss occurred, the insured’s precarious financial status, and the removal of personal effects from a building before it suffers the loss.
If an insured submits a claim that is overvalued in relation to the actual value of the property lost, a dispute may arise with the insurer as to the amount to be paid. Mere overvaluation, although suspicious, does not necessarily constitute fraud in the submission of the claim because various appraisers and adjusters may have different judgments and opinions as to the value of a loss. If the overvaluation is based on a bona fide dispute as to the nature and extent of the loss, it may not support a conviction for a fraudulent claim.
Overinsurance is the maintenance of insurance in excess of the value of the property. Such is not a crime in itself, but it may be some evidence of an insured’s fraudulent intent with respect to the value of the loss.
A person may be found guilty of submitting a fraudulent insurance claim even if the insurer does not rely on the proof of loss or claim and does not pay the claim.
Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.