Three distinct laws in California list the criminal offense of automobile insurance fraud. These laws include Penal Code 548 (Damaging or Abandoning an Auto), Penal Code 550 (Fraudulent Claims, Multiple Claims, False Statements, and Causing an Accident), and Penal Code 549 (Soliciting or Referring Automobile Insurance Fraud Business.) Some examples of individuals who can commit the offense of auto insurance fraud are policyholders, attorneys, health care providers, and car dealers.
If you or your loved one has been charged with the offense of auto insurance fraud in Los Angeles, you can reach out to us at The Los Angeles Criminal Defense Attorney to obtain professional legal help. We have extensive experience in assisting defendants who have been charged with offenses involving auto insurance fraud.
The Legal Definition of Auto Insurance Fraud
There is no exact legal definition of auto insurance fraud. The legal definition of auto insurance fraud varies depending on the specific offense you have been charged with. There are two primary laws in California that discuss auto insurance fraud. These laws include the California Penal Code and The Insurance Fraud Prevention Act.
Generally, The Insurance Fraud Prevention Act criminalizes all forms of insurance fraud, including automobile insurance fraud. This act states that it is a criminal offense to present, prepare, or make false or misleading statements to defraud an insurance company, or to aid or to become an accomplice when committing such acts.
Sections 548 – 550 of the California Penal Code list the various offenses which can be classified as auto insurance fraud. Below, we discuss these offenses as per the provisions of the California Penal Code:
Penal Code 548 Damaging or Abandoning an Auto
According to PC 548, it is a criminal offense to injure, dispose of, abandon, or hide an insured car with the aim of defrauding or prejudicing the insurer. For the prosecution to convince the court that you should be convicted of abandoning or damaging an auto, they must prove that you had an intention to prejudice or defraud. The prosecutor should show the court that you intended to deceive an insurance company for it to lose money or to be deprived of its property, legal, or financial rights. The court will convict you of Penal Code 548 if it is satisfied that you abandoned or damaged an auto with intent to defraud or deceive any insurance company, even if the company did not lose any money or you did not possess or own the motor vehicle.
Penal Code 549 Soliciting or Referring Auto Insurance Fraud Business
Auto body dealers work with insurers. Insurers may hire auto body dealers to repair damaged motor vehicles for them. Typically, most auto body dealers are in stiff competition with each other to be hired by various insurance companies. Some of them may offer kickbacks to insurance adjusters, in exchange for them to be referred to repair damaged, insured cars. California Penal Code 549 criminalizes such acts.
The California Department of Prosecution may charge both adjusters and auto body dealers with the criminal offense of soliciting or referring auto insurance fraud business if they engage themselves in such activities. Often, such schemes may be investigated by law enforcement officers working undercover.
Penal Code 550 Fraudulent Claims
Penal Code 550 covers various forms of California auto insurance fraudulent claims. For instance, Penal Code 550(a)(4) states that it is unlawful for an individual to present a fraudulent or false claim for conversion, theft, damage, or destruction of a car.
For the prosecutor to convince the jury to convict you of Penal Code 550 fraudulent claims, he/she must prove that you fraudulently or falsely claimed compensation for a motor vehicle due to destruction, theft, or damage. The prosecutor must also illustrate that you knew the claim for compensation was fraudulent or false, and you had an intention to prejudice or defraud. Just like Penal Code 548 Abandoning or Damaging an Auto, the prosecution does not need to prove that the insurance company incurred any financial losses because of your actions.
Penal Code 550 Multiple Claims
As per California Penal Code 550(a)(4), it is a criminal offense to present multiple claims for compensation for the same loss to an insurer. For the jury to convict you of Penal Code 550 multiple claims, the prosecution must prove to them that you knew you were presenting multiple claims to cover the same loss, and you had an intention to defraud the insurance company.
Penal Code 550 Causing an Accident
The court will hold you to have violated Penal Code 550(a)(3) if you participated or caused a car accident with the intention of presenting a fraudulent or false claim to an insurance company. The primary element that the prosecution must prove for you to be convicted of this offense is intent to defraud or prejudice. Moreover, the prosecution must also demonstrate that you directly caused the accident, and the accident could not have occurred had you not caused it.
Penal Code 550 False Statements
According to California Penal Code 550 subsections (b)(1 – 4), it is a criminal offense to present, make, or prepare misleading or false information about a material fact as part of an insurance claim for compensation. The term ‘material fact’ refers to any information that can affect the validity and value of the claim, such as, where the accident occurred and the magnitude and degree of damage. The jury would not convict you under Penal Code 550 False Statements if the misleading or false information was not of a material fact.
What are the Most Common Types of Auto Insurance Fraud?
The authorities will start investigating you of auto insurance fraud if you lie to a car insurance company for financial gain. According to the National Insurance Crime Bureau, Los Angeles has the highest number of reported cases of automobile insurance fraud. Furthermore, as per the Coalition Against Insurance Fraud, California ranks high for fraudulent auto insurance claims. The most common types of auto insurance fraud in Los Angeles include:
1. Fake Air Bags
Airbags are essential in saving lives and protecting the motor vehicle during crashes. Some auto shop dealers may install fake airbags that can be potentially life-threatening. When a collision occurs, a motor vehicle with a counterfeit airbag has a high risk of being severely damaged. Then, the auto dealers who had installed the fake airbags may solicit the insurance company for them to be hired to repair the damaged car. This enables them to make huge profits.
2. Staged Accidents
As per the National Insurance Crime Bureau, the number of staged crashes is increasing each passing day. The most popular types of staged accidents include:
- Swoop and squat — Two motor vehicles trap the victim in a rear-end collision
- Drive down — The victim makes an early left-turn because he/she is lured by an oncoming motorist who later collides with him/her.
- Wave down — The victim waves to a motorist, indicating that he/she can pull out of a side street or parking lot. Later, the victim is involved in a crash with the motorist and another motor vehicle.
- Enhanced damages — The driver who is not liable for the accident intentionally damages his/her car to increase the value of the claim.
- Panic stop — A motor vehicle driver looks out for a distracted motorist behind him/her and slams on his/her brakes. This causes the tailing car to rear-end the motorist’s vehicle.
- Sideswipe — A motorist positions himself/herself in such a manner that he/she can side sweep another vehicle that is utilizing the inner left-turn lane of a dual left-turn lane intersection.
When you are involved in an auto accident, you should gather all the available evidence. For instance, you should take photos of the accident scene, talk to eyewitnesses as well as other people involved in the crash and obtain their personal details, and request a police report. This will prevent the insurance company from falsely accusing you of staging an accident with intent to defraud.
3. Windshield Replacement Scams
A stranger may approach you at a parking lot and claim that he/she will help you replace your car’s windshield for free, provided that you give him/her your insurance details. Such offers may seem to be great, but they always turn out as scams. When the stranger acquires your insurance details, he or she may submit fraudulent or multiple claims under your name. Then, you will have to clear your name and deal with law enforcement because of the false claims, as well as face criminal charges for auto insurance fraud.
4. Vehicle Dumping
Motorists may commit the offense of auto insurance fraud by dumping their insured vehicles. For instance, they may drown it in a lake, leave it in an isolated area, or burn it up. Then, they may inform their auto insurance companies that their vehicles have been stolen to obtain compensation.
5. Reporting a Sold Vehicle Stolen
This auto insurance fraud type is quite similar to motor vehicle dumping. Here, the car owner might sell his/her own car legitimately or illegally and report it as stolen. In such instances, the motor vehicle owner will receive double payment from both the buyer and his/her insurer via a settlement.
6. False Statements when Filing Insurance Claims
Some people may commit the offense of auto insurance fraud by making false statements when filing claims for compensation. For instance, they may allege that their car was a 2019 model, yet it was actually a 2017 model to receive more compensation. Such an allegation is a material fact because it can affect the value of your claim, and can lead to auto insurance fraud charges.
The Penalties for Auto Insurance Fraud
The penalties for auto insurance fraud vary per the offense the jury has convicted you of. Let’s discuss the specific criminal penalties for each type of automobile insurance fraud.
Penal Code 548 Abandoning or Damaging an Auto
California prosecutors charge Penal Code 548 Abandoning or Damaging an Auto as a felony. Its potential penalties include formal probation, a jail term of two, three, or five years, or a fine of a maximum value of $50,000. You may receive a penalty enhancement of an extra two-year jail sentence if you have a prior conviction of auto insurance fraud.
Penal Code 549 Soliciting or Referring Auto Insurance Fraud Business
Penal Code 549 Soliciting or Referring Auto Insurance Fraud Business is a wobbler, and the California Department of Prosecution may charge it as either a felony or a misdemeanor. If this offense is charged as a misdemeanor, its potential punishments include informal probation, a maximum of a one-year county jail term, and a fine of up to $1,000. The penalties for felony 549 are formal probation, a county jail term of 16 months, two, or three years, and a fine whose maximum value is $50,000 or that which doubles the insurance fraud amount. You will automatically be charged with felony soliciting or referring auto insurance fraud business if you have a prior auto insurance fraud conviction on your record.
Penal Code 550 Multiple Claims and Fraudulent Claims
If you submit fraudulent or false claims as described in Penal Code 550(a)4, or present multiple claims as per Penal Code 550(a)(2), you risk facing formal probation, a jail sentence of two years, three years, or five years, or a fine of up to $50,000 or that which is double the fraud amount upon conviction. You will also receive a jail sentence enhancement of two years for each past auto insurance fraud conviction. Furthermore, the court may deny you a suspension on your sentence or probation if you have a prior conviction.
Penal Code 550 Causing an Accident
Penal Code 550 Causing an Accident is punished by formal probation, a jail term of two years, three years, or five years, or a fine of up to $50,000 or double the fraud amount. Additionally, the court may sentence you to an additional two-year jail term for each prior auto fraud conviction under either PC 548 or PC 550 or for each individual who sustained serious physical injuries because of your actions. The court may also grant you a jail sentence enhancement of a minimum of three years if you inflicted great bodily injury on another person while committing the crime. Moreover, you may receive a five-year sentence enhancement if you have two or more past convictions of Penal Code 550 Causing an Accident.
Penal Code 550 False Statements
As per California auto fraud insurance laws, Penal Code 550 False Statements is a wobbler. The prosecutor may charge it as either a misdemeanor or a felony, depending on the criminal history of the defendant and the facts and circumstances of the crime. As a misdemeanor, Penal Code 550 False Statements is punishable by summary probation, a county jail term of up to one year, or a fine whose maximum value is $10,000. On the other hand, the penalties for felony Penal Code 550 False Statements include formal probation, a jail sentence of two years, three years, or five years, or a fine of up to $50,000, or that which the doubles the fraud amount.
Legal Defenses to Auto Insurance Fraud
Most California prosecutors take cases involving auto insurance fraud very seriously due to various reasons. First, automobile insurance fraud is quite rampant in California and the entire United States. Due to numerous cases involving automobile insurance fraud, the LA County District Attorney’s Office has dedicated a separate department for prosecuting such cases – the Automobile Insurance Fraud Division.
Second, almost all insurance companies exert political influence and power, and it is for the benefit of law enforcement officers to reduce insurance fraud. The California Department of Insurance has joined efforts with various local prosecutors to deal aggressively with any suspected cases of insurance fraud.
However, some prosecutors may be quite overzealous in their fight against auto insurance fraud and make rushed decisions based on shoddy investigations. Such prosecutors are usually focused on statistics instead of justice, and they may charge otherwise innocent defendants for various auto insurance fraud crimes. If you have been accused of auto insurance fraud, you should consider using the following defenses:
Lack of Fraudulent Intent
In all types of auto insurance fraud, the prosecution must prove that you had an intention to defraud or prejudice for the jury to convict you. Sometimes, you may make a minor error when filing your insurance claim; and the law enforcement may flag it as a fraud.
The burden of proof falls on the prosecutor, and the standard of proof is beyond a reasonable doubt. The prosecution must adhere to this high standard of proof when providing evidence to show that you had fraudulent intent. Most prosecutors usually fail to reach this standard, and as a result, the defendant’s charges may be either dropped or reduced.
Cases involving auto insurance fraud are usually complicated. The prosecution may find it challenging to prove beyond a reasonable doubt that you committed the fraud, especially if there is circumstantial evidence, conflicting testimonies, or convoluted paper trails. Your criminal defense attorney can help you identify various ambiguities in the case of the prosecution to convince the jury that you are innocent.
Offenses Related to Auto Insurance Fraud
There are several California criminal offenses related to auto insurance fraud. Some of these offenses include:
California Penal Code 451 criminalizes the act of setting on fire a particular piece of property maliciously and willfully. The California Department of Prosecution may charge you under Penal Code 451 if you burn an insured motor vehicle with an intention to defraud an insurance company. Under these circumstances, you risk facing a state prison sentence of sixteen months, two years, or three years, or a fine of up to $50,000 or double the value of the fraudulent monetary gain upon conviction.
2. Health Care Fraud
The criminal offense of health care fraud occurs when an individual files a claim to an insurance company for compensation for medical services he/she did not receive or which is more expensive than what he/she received. This offense can also occur when a person files multiple claims for compensation for the same medical service. A car accident might result in criminal charges of both health care fraud and auto insurance fraud if the victim submitted multiple or fraudulent claims for both motor vehicle damage and medical expenses.
3. Making a False Report of Vehicle Theft
According to Vehicle Code 10501, it is a criminal offense to make a false report of an auto theft. Often, this offense is charged alongside with auto insurance fraud. The California Department of Prosecution will charge you under Vehicle Code 10501 if you file or make a fraudulent or false report of theft of a motor vehicle to law enforcement with intent to defraud. Vehicle Code 10501 is charged as a misdemeanor, and you will be sentenced to a jail term of six months upon conviction as a first time offender. Due to its less grievous penalty, your attorney can enter into a plea bargaining agreement with the prosecution to reduce your auto insurance fraud charges.
Expungement of Auto Insurance Fraud Convictions
As per California Penal Code 1203.4, you can expunge your auto insurance fraud conviction if you didn’t serve any term in state prison. Generally, all convictions of misdemeanor auto insurance fraud can be expunged. You may not be eligible for expungement if you have prior felony convictions of auto insurance fraud on your record. The surest way to know whether you qualify for expungement is to consult a criminal defense attorney.
Find a Los Angeles Auto Insurance Fraud Attorney Near Me
Get in touch with us at The Los Angeles Criminal Defense Attorney if you would like to build an excellent defense strategy against your insurance fraud charges. Call us today at 310-564-2605 for a free, initial consultation. We may be able to intervene and prevent the prosecution from instituting any criminal charge against you.