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Insurance fraud isn’t limited to fake claims – phony applications also count

On Behalf of | Oct 3, 2023 | White-Collar Crimes |

Insurance is a type of financial product that protects consumers against economic loss. But insurance doesn’t come cheap, so it’s unsurprising that many Americans shop around for better rates during renewal season to cover their cars and homes for a reasonable price.

Much of insurance pricing is based on several factors. For home insurance, the property’s age, location and even its proximity to a fire station are all considered for pricing. Regarding auto insurance, the vehicle’s type and safety features can affect premiums, as can the driver’s behavior and driving history.

It might be tempting to lie on your insurance application for more favorable rates. Maybe you’d claim that your home is at another address or that you drive your car less than you actually do for a daily commute. After all, lying on an insurance application can’t be as bad as filing a false claim, right?

Surprisingly, a lot of Americans have had the same idea. A study found that 21% of auto and 30% of home insurance customers indicated they had misled their insurers to lower their expenses.

But under Texas law, lying in your insurance application is a criminal offense. You could face fines and even jail time for fibbing your application form. If you’re taking out a huge claim using the misrepresented information, a court could even convict you of committing a felony.

Insurance application fraud law

According to state rules, it’s illegal to deceive an insurer by preparing and presenting an application with false or misleading material information. Those who violate the law and attempt to take out a claim while registered with fake information can be charged with insurance fraud.

The penalties for lying on an insurance application are the same as the punishments awaiting those who file a fraudulent insurance claim.

If you file for a claim with a value less than $100 with misrepresented insurance application information, you face a Class C misdemeanor charge. On conviction, you’ll have to pay a $500 fine.

On the other end of the spectrum, misrepresenting material information while attempting to file an insurance claim worth $300,000 or more could lead to a first-degree felony charge. On conviction, you face a life prison sentence or up to 99 years of incarceration.

Lying on your insurance application – no matter how small the lie or how advantageous it is for your rates – is a criminal offense. It’s also a white-collar crime that can easily lead to felony charges. If you’re accused of violating the law, don’t underestimate the impact a conviction can have on your life.