Any person who willfully makes a false statement or misrepresentation of a material fact for the purpose of obtaining or denying any benefit or payment or assisting another to obtain or deny any benefit or payment can be charged with a felony. If you then are able to obtain the insurance payment or benefits based on those false statements or misrepresentations, you have now obtained property by false pretenses, which can also be a felony charge.

Most insurance customers are honest and do not set out to commit fraud. Nevertheless, fraud can be committed by consumers who do not necessarily know what they are doing is fraudulent. For example, they may see exaggeration of an otherwise genuine claim as just part of the negotiating process. Others may feel lying to an insurance company is “fair game” because they just want something in return for their premiums. Committing fraud may be tempting for some, but rest assured, trained invesigators are always watching!

But is it really FRAUD?

Tab/Accordion Items

Lets say you have damage to your car, but do not have physical damage coverage on your insurance policy. You call your insurance company and add the needed coverage. You now submit a claim to have the damage to your vehicle fixed, citing the damage is new and just happened after adding the physical damage coverage. The insurance company pays the claim for your damage.

Yes, you have now committed insurance fraud.

Your home is broken into and personal items are stolen. You tell the insurance company items that you did not actually own were stolen also, in attempts to collect more in insurance benefits. 

Just by providing false statements such as this to an insurance company, you have committed insurance fraud.

Telling your insurance company your vehicle is primarily garaged in a rural area and only driven for pleasure use- but in reality, you live and drive in the city, primarily back and forth to work or school daily.

By doing this, rates may be lower, but providing knowingly false statements are still fraudulent.

Your big screen TV just quit working, then a week later your home was struck by lightning. You tell your insurance company the TV was damaged by the lightning storm, so it can be covered by your homeowners/renters insurance.

Knowingly providing false information is fraudulent.


Your are "upside down" on your auto loan. While driving, you purposely and abruptly hit your breaks in heavy traffic, in hopes another vehicle will hit you from behind. You get hit and submit a claim to the other party's insurance company for your damages, in efforts to have your vehicle totaled and paid off by the insurance company.

Purposely staging an accident in any way, is insurance fraud.

How fraud is detected

Tab/Accordion Items

All insurance companies have a Special Investigation Unit (SIU) or trained special fraud investigators. The main duties of an SIU is to detect, investigate and pursue action against fraudulent activities on the part of insureds or claimants. These investigators may consist of special claims adjusters who have extensive knowledge and training regarding insurance claims and fraud. Often special investigative units also consist of experts in law enforcement, as well.

The SIU works closely with the local law enforcement community, including the National Insurance Crime Bureau, Federal Bureau of Investigation (FBI) and Criminal Investigation/ Fraud Divisions within the regulatory agency (like the North Carolina Department of Insurance).

Fraud investigators often use antifraud claims databases and antifraud bureau's to assist with their investigation. Antifraud databases can tell investigators when prior insurance claims have been filed by an individual or organization, what was claimed, nature of the loss, mechanisms of injuries, etc. This can be used to cross-check new claims against existing records to deny or reduce questionable, fraudulent or non-meritorious claims. Antifraud bureaus or agencies can also help Special Investigation Units, regulatory agencies, law enforcement detect, investigate, and report fraud by collaborating their many resources.

How one behaves in the claims process often tells insurance representatives and investigators a lot and may often reveal more than they intend through their choices of words. For example, before answering a question with a lie, a deceptive person will usually try to avoid answering the question at all. Deceptive people also often use language that minimizes references to themselves, lays blame on others, provides lack of detail or alludes to actions without just saying it. Investigators are trained to detect unusual behavior.

More and more commonly, people are running to post their opinions, daily life synopsis's and their locations at any given time, on the internet. Insurance representatives, special investigators and law enforcement can use activity history, comments, pictures and posts on social media for information in an investigation.

Insurance companies, law enforcement and special fraud investigator often use specialized data analytics techniques such as data mining, data matching, machine learning, statistics, pattern recognition, etc. to detect and recognize fraud. Data is pulled from an abundance of sources to analyze for a fraud investigation.

The Cost of Fraud

Insurance fraud hurts more than just yourself and an insurance company. Fraudsters can face multiple felony charges, restitution and jail time. Remember, not only could you be jailed for committing fraud, you could also have to pay back all of the money fraudulently obtained and pay various fines.

At the end of the day, society as a whole pays the costs of insurance fraud through increased premiums. Be honest and save time, money, your freedom and reputation.

Real Examples of Insurance Fraud Cases from Actual Department of Insurance Press Releases (names have been changed)

“John Smith, 27, of Fayetteville. Smith was charged with insurance fraud, a felony. According to the arrest warrant, Smith filed a claim with Progressive Premier Insurance for damage to his vehicle and another man’s vehicle, claiming that the damage occurred after he took out the insurance policy when it occurred before he took out the policy.”

“James Robert, 42, of Hickory, was charged with insurance fraud, a felony. Special agents with the Department of Insurance’s Criminal Investigations Division accuse Robert of providing a $28,995 repair estimate from a business that does not exist in support of an automobile insurance policy claim with Geico.”

“Jane Green, 31, of Carrboro, was charged with insurance fraud and attempting to obtain property by false pretense, both felonies. Special agents with the Department of Insurance’s Criminal Investigations Division accuse Green of attempting to obtain $3,000 from USAA Insurance Co. by filing a fraudulent renters’ policy claim for damage to a ninth-generation MacBook Pro laptop that she did not possess, purchase or own”

“Sam Black, 65, of Wilmington, was charged with insurance fraud and obtaining property by false pretense, both felonies. Special agents with the Department of Insurance’s Criminal Investigations Division accuse Black of obtaining $6,000 from Aflac Insurance in short-term disability insurance funds that he was not entitled to receive. According to the criminal summons, Black told AFLAC that he could no longer work when he was still employed and working.”

“Andrew Davis, 32, of Whitakers, was charged with four counts of insurance fraud and four counts of obtaining property by false pretense, all felonies. Special agents with the Department of Insurance’s Criminal Investigations Division accuse Davis of pursuing automobile insurance claims with State Farm Mutual Automobile Insurance Co. for a vehicle he did not own that was involved in staged crashes. According to the arrest warrants, Davis obtained payments totaling $13,642.42 as a result of the claims.”

“David Howards, 52, of Charlotte, was charged with insurance fraud, a felony, and a misdemeanor charge of making a false statement on an insurance application. Special agents with the Department of Insurance’s Criminal Investigations Division accuse Howards of listing four men’s mink coats, valued at $20,000, on a report of stolen property with State Farm Fire & Casualty Co. when the coats were not actually stolen.”