Auto Insurance Fraud Penalties
- Auto insurance fraud causes insured drivers to pay higher insurance rates.green money image by Maxim Kulemza from Fotolia.com
Auto insurance fraud is well known to the industry and costs insured drivers lots of money. Senator Charles Schumer of New York writes as of February 2010 that auto insurance fraud cost his state approximately $229 million in 2009 alone. In order to recover these illegitimate losses, insurers must raise premium rates for everyone, even those not involved with fraud. Because the crime is so severe, the penalties are severe as well. - Although laws for auto insurance fraud vary by state, fraud is a criminal matter in all states. If you are convicted of this crime, it will go on your criminal record. This may make it more difficult for you to secure a job, future auto insurance or even credit.
- All states include a prison sentence with a fraud conviction. The amount of time behind bars varies by state but in many cases you could spend several years in jail for committing this type of crime.
- A fraud conviction typically comes with steep fines, sometimes in the tens of thousands of dollars. You may also be required to pay restitution fees in addition to the fines. In Michigan, for example, the maximum fine is $50,000 plus restitution.
- Proposed by Senator Schumer in early 2010, the Cheaper Car Insurance Act of 2010 would streamline penalties for auto insurance fraud across the nation if passed into law. It would make fraud conviction a federal offense tried in federal courts. Financial penalties would be increased up to $100,000, or the total amount of the fraud if exceeding that threshold. Jail time would be up to 5, 10 or 15 years, depending on the type of involvement a person had in the overall fraud.
