Filing Fake Auto Insurance Claims (Insurance Fraud) – What You Need to Know

Auto insurance fraud is the most common type of fraud committed in the state of California.

In addition to simply submitting a fake insurance claim, there are numerous ways someone can be guilty of committing insurance fraud.

Whether you are an auto technician who paid an insurance agent to get them to refer customers to their shop, a driver who claimed to live in a different state that had lower insurance rates, or a car owner who purposefully damaged your own vehicle in order to submit a claim, you could find yourself facing criminal charges under one of California’s several auto insurance fraud statutes.

If you’ve been accused of submitting a false insurance claim or a related offense, it’s important that you seek the assistance of a criminal defense attorney who understands the ins and outs of California’s auto insurance fraud laws. 

Filing a fraudulent auto insurance claim – California Penal Code Sections 548, 549, 550, and 551 PC

While auto insurance fraud can take many different forms, it is defined by three general elements that a prosecutor must prove in order to find you guilty of the offense. Those elements are:

  1. You submitted a fraudulent insurance claim,
  2. You knew that the claim was fraudulent, and
  3. You submitted the claim with the intent to defraud the insurance company

In California, there are four different statutes that each cover specific ways in which a person may commit auto insurance fraud:

California Penal Code 548 PC

California Penal Code 548 PC makes it a crime to purposely damage, destroy, hide or dispose of an insured automobile in order to submit a fake claim to an auto insurance company.

    Example: George partially disassembles his car and hides the parts in a couple of different storage facilities. He then files a claim with his insurance company, reporting that the car has been stolen. 

    California Penal Code 549 PC

    California Penal Code 549 PC makes it illegal to refer someone to an auto repair shop or technician who they know will purposefully submit a fraudulent insurance claim. 

      Example: Karen tells her friend Alice that she damaged her car by accidentally backing into the side of her garage. Alice refers Karen to an auto body technician she knows who will report that the damage was caused by another driver rear-ending Karen so that she can submit an insurance claim, after he recently did the same for her. 

      California Penal Code 550 PC

      California Penal Code 550 PC covers a few different types of fraudulent activities including:

        1. Submitting a fake insurance claim
        2. Staging an accident in order to be able to submit a claim to an auto insurance company
        3. Falsely claiming to live in a different state or city that has lower auto insurance rates
        4. Supporting the submission of a fraudulent claim by creating or a signing a relevant document

        Example: Rhonda falsely states that her mom’s address is her own when acquiring an auto insurance policy because her mom lives in another state that has less expensive auto insurance rates. 

        California Penal Code 551 PC

        California Penal Code 551 PC makes it a crime for an auto repair professional to pay an insurance agent in exchange for client referrals.

          Example: Ken, an auto repair shop owner, sends a percentage of the money he receives from fixing a referred client’s car to Jen, a local insurance agent, any time she refers the client to him.

          Penalties for filing a fraudulent auto insurance claim

          Auto insurance fraud is a “wobbler” offense, which means that it can be charged as either a misdemeanor or a felony depending on the facts of the case and the defendant’s criminal history. 

          Penalties for misdemeanor auto insurance fraud may include:

          • Up to 6 months in county jail, 
          • A fine of up to $1,000,
          • Restitution paid to the insurance company, and
          • Misdemeanor probation

          If charged as a felony, auto insurance fraud penalties may include:

          • Up to 5 years in state prison,
          • A fine of up to $50,000,
          • Restitution paid to the insurance company, and
          • Two additional years in state prison for each prior auto insurance fraud conviction

          If you’ve been charged with auto insurance fraud under one of the four California statutes described above, there are legal defense options available to you. Because auto insurance fraud cases can vary widely, it’s important that you work with your lawyer to determine which defense is best for your case.

          Some of the most common defenses against accusations of submitting a fake auto insurance claim are:

          • Lack of intent – In order to be guilty of committing auto insurance fraud, you need to have filed a false claim with the specific intent to defraud the insurance company. If, for example, you made a mistake in answering a question or filling out a form, you are not guilty of fraud.
          • Mistaken identity – This defense may apply to you if you’ve been accused of committing an act of auto insurance fraud that someone else actually committed. For example, if another member of your family submitted a false claim to your insurance company without your knowledge by forging your signature on forms or documents, then you are not the perpetrator of the fraud.
          • Insufficient evidence – As with any criminal case, it is up to the prosecutor to present enough evidence to prove a defendant’s guilt beyond a reasonable doubt. If there is a lack of evidence or the evidence presented is weak, such as a statement by an unreliable witness, then you may be able to have your case dismissed.
          • Duress or coercion – You may be able to use this defense if you were forced or coerced into participating in an auto insurance fraud scheme.
          • Statute-specific defenses – While the above defenses apply more generally to cases of auto insurance fraud, there may be other defense strategies that can be used against charges under specific statutes. 

          California auto insurance fraud defense attorney 

          If you are under investigation or have been charged with submitting a fake auto insurance claim, it’s crucial that you seek assistance from a California criminal defense lawyer right away.

          With early intervention, you have the best chance of a favorable outcome, which could mean having your charges reduced or dropped entirely. Los Angeles defense attorney Robert M. Helfend has over four decades of experience defending clients against all types of charges, including insurance fraud. He has been recognized by numerous professional organizations including The National Trial Lawyers Association, SuperLawyers, Expertise.com for his extensive legal knowledge and aggressive defense of his clients.

          Whatever the unique circumstances of your auto insurance fraud case may be, Mr. Helfend can determine the best defense strategy for you. Call today to learn more and to schedule your free consultation – 800-834-6434.

          Published March 8, 2025.