California Insurance Fraud Laws

California insurance fraud laws seek to prevent and punish false claims intended to generate payments to consumers or other payees of insurance companies. A consumer might commit insurance fraud by submitting a claim based on a false, exaggerated, or deliberate injury or loss. A doctor or auto repair shop might inflate the cost of services, charge for services that were not included on an original estimate, or charge for services that were never actually performed. In addition, a group or organization might work together as an insurance claim mill to create accidents or injuries that permit the filing of insurance claims.

Insurance Fraud Laws

The state laws against insurance fraud come from both the California Penal Code and Insurance Code. State laws define various types of insurance fraud, such as claims related to automobile insurance, health insurance, worker's compensation insurance, and insurance of property such as a home.

In general, a prosecution for insurance fraud requires proof of the defendant's intent to defraud. The prosecutor must show that the defendant took intentional steps to claim benefits to which the defendant did not have a right. Alternatively, the prosecutor may show that the defendant had a right to claim benefits, but exaggerated or padded the claim in order to receive a higher amount of benefits. The case might involve a false or misleading statement made by the defendant or an omission of facts that would have changed the outcome of the defendant's claim.

See Fraud to for more general information.

Overview of California Insurance Fraud Laws

The following chart provides some general information on the California insurance fraud laws, defenses, and penalties:

Statutes California Penal Code Sections 548-551; California Insurance Code Sections 1871-1871.9
Defenses Lack of intent to defraud: a defendant may have made a mistake or genuinely believed that the claim was legitimate.
Penalties and Sentences

The punishment for a conviction depends on the specific type of insurance fraud and the defendant's activities.

  • Insurance fraud prosecuted as a misdemeanor in California may result in a sentence of up to one year in county jail, a fine of up to $10,000, or both.
  • In general, insurance fraud prosecuted as a felony can result in a term of imprisonment for two, three, or five years.
  • A California state court may also impose a fine in an amount up to $50,000 or double the value of the defrauded amount, with the court choosing the greater of the two amounts.
  • In a felony prosecution of insurance fraud for worker's compensation benefits, the fine might increase up to $150,000 or an amount that is double the value of the defrauded amount, depending on which penalty is greater.
  • For many types of insurance fraud, a previous felony conviction for insurance fraud may result in a sentencing enhancement that adds two years for each prior offense to the defendant's term of imprisonment.
  • Possible restitution to the victim.

Note: State laws are always subject to change through the passage of new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.

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