Insurance fraud is specifically classified as a crime in 48 out of 50 states (all except Oregon and Virginia). Insurance fraud is defined as any act committed with the intention of fraudulently obtaining a payment from an insurance company. The types of insurance fraud that exist are as diverse as the industry itself. Insurance fraud is prevalent in the health care, automobile, property and life insurance industries.
Insurance fraud has been in existence since the beginning of the commercial insurance industry. As a New York City Insurance Fraud Attorney, I know fraudulent claims cost insurers billions of dollars every year and they account for a significant percentage of all claims received by insurance companies. Insurance fraud exists in all areas of the insurance industry.
The types of insurance fraud range from slight exaggerations in claims to intentionally causing damage or accidents. Insurance fraud is not a victimless crime. It does affect the lives of innocent people directly through accidental and intentional injury and it causes higher insurance premiums for everyone. Given that, it’s not surprising that NYC authorities pursue insurance fraud so aggressively.Insurance Fraud Laws in New York
There are several degrees of New York Insurance fraud.
The most common New York insurance fraud charge is insurance fraud in the fifth degree, a class A misdemeanor that carries imprisonment up to one year.
If someone acquires property valued at more than $1,000, it is a class E felony and fraud in the fourth degree with a potential maximum of four years imprisonment.
If the value of property is equal to $3,000 the crime becomes a third degree, class D felony and the perpetrator faces up to seven years in prison.
$50,000 in illegal gains is a class C felony in the second degree with a maximum of 15 years in prison,
Stealing a million dollars is first degree insurance fraud, a class B felony, and allows for up to a 25 year prison sentence.Detecting Insurance Fraud
The two types of fraudulent insurance claims are exaggerated claims or false claims for damages that never actually occurred. When an exaggerated claim is found by an insurance company they will usually try to negotiate the claim down to the correct amount.
Suspicious insurance claims are also transferred to special investigation units or SIUs for continued investigation. The SIUs are comprised of experienced claims adjusters who have received specialized training in investigating fraudulent claims.
They look for the tell-tale signs of fraudulent claims or look for evidence of falsification. The evidence gathered by investigators can be used to deny payment of the claims or to prosecute fraudsters if the violation is serious.