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What is Auto Insurance Fraud?

This type of fraud entails someone deceiving an insurance company about a claim involving their personal or commercial motor vehicle. It can involve giving out misleading information or providing false documentation to support the claim.


Here are a few typical scenarios to illustrate some of the different ways automotive insurance fraud can be committed:

Andrea was driving without insurance and had an accident. When she applied for insurance, she lied. She said she’d had no accidents. Then she filed a claim saying that her car had been damaged, lying that the accident happened after the policy took effect.

When Mike purchased his policy, he admitted his adult son John lived with him but didn’t have a valid driver’s license. So John was listed on the policy as an “excluded driver.” Mike’s policy was clear that the insurance company would not pay any claim for loss or injury if John was operating the vehicle at the time of an accident. But after John crashed Mike’s car into a telephone pole, Mike submitted a claim and lied by saying he was driving.

After Austin’s car was rear-ended, he didn’t feel so hot. But he exaggerated the extent of his injuries saying his neck and back hurt and went for medical treatment he knew he didn’t really need in order to get a larger settlement from the insurance company.

The transmission on Megan’s SUV was shot and mechanics told her it would cost $7,000 to fix. She couldn’t sell the SUV and still owed the bank $3,600 on her auto loan. She gave her keys to a “friend” to get rid of the SUV for her and reported to the police and her insurance company that the SUV had been stolen - so the insurance company would pay off her auto loan.


Automotive insurance fraud is a serious crime. As with all other types of insurance fraud‚ Michigan considers it a felony. Violators can spend up to four years in jail and spend up to $50,000 in fines. There are also many other associated expenses such as court costs and legal fees. Plus, those found guilty of insurance fraud have the stigmas and limitations of being a convicted felon to carry with them for life.