What is Insurance Fraud and How Can You Avoid It?

In the high-stakes world of car accident claims, where significant amounts of money are on the line, the temptation to bend the truth or embellish the facts can be strong. However, what might seem like a “little white lie” to an insurance company can actually be a serious crime: insurance fraud.

Insurance fraud is not a victimless crime. It drives up the cost of insurance for everyone in Washington State and is aggressively investigated and prosecuted. While most people would never intentionally commit fraud, the complex claims process can sometimes lead well-meaning individuals to make mistakes that put them in legal jeopardy.

Understanding what constitutes insurance fraud and how to maintain a truthful and transparent claim is the only way to ensure you get the compensation you rightfully deserve without risking devastating legal and financial consequences.

Useful Information for You: In a Nutshell

• What It Is: Insurance fraud is the act of intentionally deceiving an insurance company to receive a financial benefit you are not entitled to.
• Two Main Types: (1) “Hard Fraud” is a deliberate, planned act, like staging an accident. (2) “Soft Fraud” is more common and involves exaggerating a legitimate claim, like claiming an old injury is new.
• It is a Serious Crime: Insurance fraud in Washington is a felony, punishable by fines, restitution, and significant prison time.
• Honesty is Your Only Policy: The single most important rule is to be completely truthful with your doctors, your attorney, and the insurance company about every aspect of your accident and your injuries.
• Common Examples: Lying about your injuries, misrepresenting how the accident happened, or filing a claim for pre-existing damage are all forms of fraud.

Understanding the Two Types of Insurance Fraud

1. “Hard Fraud” (Planned Deception)

This is a deliberate, criminal act. It is when someone intentionally causes or stages an event to fraudulently collect insurance money.

• Examples:
  • Staging a fake car accident.
  • Intentionally setting fire to a vehicle (arson).
  • Faking an injury entirely.

Hard fraud is a serious felony, and those who commit it are criminals.

2. “Soft Fraud” (Opportunistic Exaggeration)

This is far more common and is where most everyday people can get into trouble. Soft fraud, also known as “opportunistic fraud,” occurs when a person has a legitimate claim but intentionally exaggerates or lies about certain aspects of it to increase their payout.

Even a “small” lie is still fraud. Common examples include:

• Exaggerating Injuries: Telling your doctor your pain is a “10 out of 10” when it’s really a 3, in the hope of getting a larger pain and suffering settlement.
• Claiming Pre-Existing Damage: Claiming that an old, unrelated dent or scratch on your car was caused by the current accident.
• Lying About Lost Wages: Telling your attorney you missed two weeks of work when you only missed one.
• Misrepresenting the Facts of the Accident: Lying about your speed or other actions to avoid being found partially at fault.

How to Avoid Accidentally Committing Fraud: A Checklist

The best way to protect yourself is to commit to 100% honesty and transparency throughout the entire process.

• ☐ Be Truthful with Your Doctors: This is the most important rule. Give your doctors a precise and honest account of your symptoms and your pain levels. Do not exaggerate. A doctor’s notes are a primary piece of evidence, and your credibility is paramount.
• ☐ Report Pre-Existing Conditions: Be upfront with your attorney about any prior injuries or medical conditions. Hiding them is a mistake; a good attorney knows how to legally handle claims involving the aggravation of a pre-existing condition.
• ☐ Provide Accurate Employment Information: Be precise about the dates you missed from work and your rate of pay.
• ☐ Stick to the Facts: When describing the accident to the police, your insurer, or your attorney, only state what you know for sure. Do not speculate, guess, or embellish the story.

The Consequences are Severe

If an insurance company catches you in a material misrepresentation, they will not only deny your entire claim (even the legitimate parts), but they will also report you to the Washington State Office of the Insurance Commissioner’s Criminal Investigations Unit. A conviction for insurance fraud can lead to felony charges, restitution (paying the money back), and jail time. It is a risk that is never, ever worth taking.

The truth is your most powerful weapon in a personal injury claim. If you have been legitimately injured in a car accident in the Tacoma area, you have the right to be fully compensated. Search the Car Accident Lawyer Directory Tacoma to find an honest and experienced local attorney who will build your case on a foundation of facts and fight for the fair and just compensation you are truly owed.

References

• Washington State Office of the Insurance Commissioner (OIC) – Insurance fraud:

  The official state resource that defines insurance fraud, provides examples, and explains the serious criminal penalties in Washington.

  https://www.insurance.wa.gov/report-fraud

• Revised Code of Washington (RCW 48.30.230) – Insurance fraud—False claims or proof:

  The official state law that legally defines the crime of insurance fraud and its classifications.

  https://app.leg.wa.gov/rcw/default.aspx?cite=48.30.230

• National Insurance Crime Bureau (NICB) – “What is Insurance Fraud?”:

  A national organization dedicated to fighting insurance fraud, providing public information on the different types of fraud.

  https://www.nicb.org/about-nicb/what-nicb-does/what-insurance-fraud