Insurance Fraud
Insurance fraud is a serious issue that can affect consumers, businesses, insurance companies, and the overall cost of coverage.
It may occur when someone knowingly provides false, incomplete, or misleading information in connection with an insurance application, policy, claim, payment request, or benefit.
Insurance fraud is not limited to claims. It may also involve applications, billing, policy changes, loss reports, supporting documents, receipts, medical records, repair estimates, or other information submitted during the insurance process.
NAIC Definition of Insurance Fraud
The National Association of Insurance Commissioners, commonly called the NAIC, describes insurance fraud as deliberate deception by an insurance company, agent, adjuster, or consumer to obtain an improper or illegitimate gain.
This definition is important because fraud can occur at many points in the insurance process, including buying, selling, using, or underwriting insurance. It may involve consumers, insurers, agents, brokers, adjusters, contractors, medical providers, or other parties.
What Insurance Fraud May Include
Insurance fraud generally involves intentional deception for an improper benefit. This may include making a false statement, hiding important information, exaggerating a loss, submitting false documents, staging an event, or helping someone else submit false or misleading information.
Fraud can involve many types of insurance, including:
Auto insurance
Homeowners insurance
Renters insurance
Commercial insurance
Workers’ compensation
Health insurance
Life insurance
Disability insurance
Not every mistake is fraud. Errors, misunderstandings, coverage disputes, billing issues, and claim disagreements can occur without fraudulent intent. However, knowingly providing false or misleading information can carry serious civil, regulatory, or criminal consequences.
Examples of Possible Insurance Fraud
Examples of conduct that may raise fraud concerns include:
Providing false information on an insurance application
Misrepresenting who lives in a household
Misstating how a vehicle, home, or business is used
Hiding prior losses, claims, drivers, employees, or business operations
Exaggerating the value of damaged or stolen property
Submitting altered invoices, receipts, photos, or documents
Claiming damage that occurred before the policy was active
Staging or intentionally causing a loss
Billing for services that were not provided
Assisting another person in submitting a false claim
Each situation depends on the facts, the policy, and applicable law.
Why Insurance Fraud Matters
Insurance fraud is not a victimless act. It can increase insurance costs, delay legitimate claims, create additional verification requirements, and harm consumers and businesses.
Fraud may be committed by or against policyholders, insurers, agents, brokers, adjusters, contractors, medical providers, businesses, or other parties involved in the insurance process.
Our Role
Orion Financial Services LLC takes accurate insurance information seriously. Applications, policy changes, and claim-related documents should be completed truthfully and completely.
If information appears inaccurate, incomplete, inconsistent, or misleading, we may ask follow-up questions, request clarification, or require additional documentation. Where required or permitted by law, suspected insurance fraud may be reported to the appropriate insurer, fraud bureau, insurance department, law enforcement agency, or other authorized authority.
Orion Financial Services LLC does not determine criminal guilt. Fraud determinations are handled by insurers, regulators, fraud bureaus, law enforcement, prosecutors, or courts, depending on the situation.
What This Means for Clients
Clients should provide accurate and complete information when applying for insurance, changing a policy, renewing coverage, or submitting claim information.
This may include information about property, vehicles, drivers, household members, business operations, payroll, employees, prior claims, health history, ownership, beneficiaries, loss details, repair estimates, receipts, and invoices.
Providing incorrect or misleading information may result in application delays, premium changes, policy cancellation or nonrenewal, claim denial, loss of coverage, referral to a carrier fraud unit or regulator, or civil or criminal consequences.
If you are unsure how to answer a question on an application or claim form, ask for clarification before signing or submitting it.
Fraud vs. Coverage Disputes
A disagreement with an insurance company is not automatically fraud.
Examples of non-fraud issues may include a claim delay, disagreement over the value of a loss, coverage question, billing issue, cancellation or nonrenewal dispute, or misunderstanding about policy terms.
If you have a dispute with an insurer, agent, broker, adjuster, or claim decision, you may be able to file a consumer complaint with your state insurance department.
State Insurance Fraud Laws
Insurance fraud laws vary by state. The following summaries are general and are not legal advice.
Connecticut
In Connecticut, insurance fraud is addressed under Conn. Gen. Stat. § 53a-215. A person may commit insurance fraud by intentionally presenting, or helping another person prepare or present, false, incomplete, or misleading information that is material to an insurance application or claim.
Connecticut classifies insurance fraud under this section as a Class D felony.
New York
In New York, insurance fraud is addressed under Article 176 of the New York Penal Law. New York law defines fraudulent insurance acts involving materially false information or concealment of material information in connection with insurance applications, claims, policies, self-insurance programs, and certain health coverage matters.
New York separates insurance fraud into different degrees depending on the facts and the value involved.
South Carolina
In South Carolina, insurance fraud is addressed through several provisions, including South Carolina Code §§ 38-55-170 and 38-55-540.
South Carolina law addresses knowingly presenting false claims for payment, making false statements or misrepresentations, and assisting, abetting, soliciting, or conspiring with another person to do so. Penalties may vary depending on the amount involved, prior violations, and the specific conduct.
South Carolina law also includes provisions for reporting, investigation, prosecution, civil penalties, and restitution in certain insurance fraud matters.
Florida
In Florida, insurance fraud is addressed under Florida Statutes § 817.234 and related provisions. Florida law addresses false and fraudulent insurance claims, including certain false, incomplete, or misleading statements made in connection with insurance claims, insurance applications, health maintenance organization contracts, and other insurance-related matters.
Florida law also includes specific provisions for certain types of conduct, including false insurance applications, personal injury protection matters, provider billing issues, and other insurance-related fraud concerns.
Reporting Suspected Fraud
If you suspect insurance fraud, you may report it to the insurance company, your state insurance department, fraud bureau, or other appropriate authority.
When reporting suspected fraud, provide factual information. Avoid speculation. Helpful information may include names, dates, policy numbers, claim numbers, documents, photos, communications, invoices, repair estimates, and a clear description of the concern.
Consumers in Connecticut, New York, South Carolina, and Florida may contact their respective state insurance department or fraud bureau for state-specific reporting options.
How to Protect Yourself
You can help reduce the risk of insurance fraud by taking practical steps:
Work with licensed insurance professionals
Review applications before signing
Do not sign blank or incomplete forms
Keep copies of applications, policies, receipts, and claim documents
Verify that coverage is active before relying on it
Review claim forms and repair estimates carefully
Question pressure tactics or unusually low premiums
Report suspicious activity to the appropriate authority
Before buying insurance, make sure you understand the coverage, limits, exclusions, deductibles, premium, effective date, insurer, and policy terms.
Important Disclosure
This information is general in nature and is provided for educational purposes only.
It does not constitute legal advice, criminal advice, claim advice, or a determination that fraud has or has not occurred.
Insurance fraud laws, reporting obligations, penalties, and enforcement procedures vary by state and may change.
Actual legal consequences depend on the facts, applicable law, insurer investigation, regulator review, and court proceedings.
Orion Financial Services LLC does not provide legal advice.
If you are accused of insurance fraud, believe you are a victim of fraud, or are unsure about your legal obligations, you should consult a qualified attorney or contact the appropriate state insurance department.