Insurance Fraud In Colorado: What's The Law?

Insurance fraud is a costly crime that affects Colorado's businesses and residents. It occurs when individuals or insurance providers deliberately provide false or misleading information to an insurance company, either before or after an incident or claim is filed. In Colorado, insurance fraud is typically prosecuted under Colorado Revised Statute Section 18-5-211, which prohibits insurance consumers from engaging in various fraudulent activities with the intent to defraud. This includes submitting false claims, causing vehicular accidents to make fraudulent claims, and providing false information on insurance applications. Insurance agents can also commit fraud by misappropriating premium funds or presenting false insurance certificates. The penalties for insurance fraud in Colorado can be severe, ranging from misdemeanours to felonies, with potential jail time and significant fines.

Soft vs. hard fraud

Insurance fraud is classified as either hard fraud or soft fraud. Both types involve the deceptive manipulation of an insurance agent or provider for financial gain. However, they differ in terms of planning and intent.

Soft fraud, also known as opportunistic or incidental fraud, is typically unplanned and arises when an individual exaggerates an otherwise legitimate claim. For example, a person involved in a car accident may claim more damage to their vehicle than actually occurred, or they may exaggerate the extent of their injuries to receive a larger payout. Soft fraud can also occur when an individual misreports previous or existing conditions when obtaining a new insurance policy to obtain a lower premium. This type of fraud is far more common than hard fraud.

Hard fraud, on the other hand, is premeditated and deliberate. It involves deliberately planning or inventing a loss covered by an insurance policy to receive a payout. For example, a homeowner may fake a robbery and list expensive items that never existed on their insurance claim. Alternatively, a business owner facing financial difficulties may commit arson to cause damage and receive an insurance payout. Criminal rings are sometimes involved in hard fraud schemes, stealing millions of dollars.

In Colorado, insurance fraud is prosecuted under Colorado Revised Statute Section 18-5-211. It is defined as deliberately making false claims or providing false information with the intent to defraud. The crime can be charged as a misdemeanor or a felony, with penalties of up to three years in prison and fines of up to $100,000.

False statements

Insurance fraud in Colorado can take many forms, but it often occurs when someone tries to make money in an insurance transaction through lies or misrepresentations. One common way this is done is by submitting false statements or false documentation to an insurance company in the claims process.

Insurance agents can also commit insurance fraud by making false statements. This can be done by presenting a certificate of insurance with false information or by misappropriating premium funds without authorisation.

It is important to note that mistakenly filing a false claim is not considered a crime in Colorado. To be prosecuted for insurance fraud, there must be evidence of an intent to defraud.

False documentation

Providing false documentation to an insurance company is a form of insurance fraud in Colorado. This can take the form of false statements or claims, or withholding material information. For example, lying about prior health conditions on a life insurance application to obtain a lower premium is considered insurance fraud.

Insurance fraud can be committed by individuals or insurance agents and can be prosecuted as a misdemeanor or a felony. The crime carries penalties of up to three years in prison and fines of up to $100,000.

Colorado Revised Statute Section 18-5-211 defines insurance fraud as:

> "With an intent to defraud presents or causes to be presented an application for the issuance or renewal of an insurance policy, which application, or documentation in support of such application or renewal, contains false material information or withholds material information that is requested by the insurer and results in the issuance of an insurance policy or insurance coverage for the applicant or another."

It is important to note that mistakenly filing a false claim is not considered a crime. To be prosecuted as insurance fraud, there must be an established intent to defraud.

False insurance certificates

In Colorado, insurance fraud is typically prosecuted under the Colorado Revised Statute Section 18-5-211. According to this statute, it is illegal for an individual to present or cause to be presented, "a certificate or any other evidence of insurance containing false information to any person or entity." This offence is classified as a class 5 felony, which carries penalties of up to 3 years in prison and fines of up to $100,000.

The creation of false insurance certificates can have significant consequences. Not only does it contribute to higher insurance premiums and increased costs for everyone, but it is also a criminal act that can result in jail time and hefty fines.

The Insurance Fraud Unit at the Colorado Attorney General's Office takes insurance fraud seriously and works closely with other agencies to investigate and prosecute those who commit this type of fraud. If you have information about insurance fraud, including false insurance certificates, it is important to report it to the appropriate authorities.

It is worth noting that insurance fraud requires an "intent to defraud". Simply making a mistake or being careless is not considered criminal. However, if there is an intent to defraud and the act results in financial gain or causes harm to others, it falls under the category of insurance fraud.

Misappropriating premium funds

In Colorado, misappropriating premium funds is considered insurance fraud. This involves insurance agents or adjusters intentionally taking insurance premium funds without authorization or lawful justification. It is a form of embezzlement, where agents or adjusters take money that is not theirs for personal gain.

Insurance fraud can be committed by both individuals and insurance professionals, such as agents or adjusters. While individuals often defraud insurance companies by staging accidents, filing false claims, or lying on applications, insurance agents and adjusters can also commit fraud by misappropriating premium funds. This type of fraud occurs when agents or adjusters take money from insurance premiums for themselves, rather than using it for its intended purpose.

In Colorado, insurance fraud is typically prosecuted under the Colorado Revised Statute Section 18-5-211. The Attorney General's Insurance Fraud Unit and local district attorney's offices investigate and prosecute insurance fraud crimes. Insurance fraud can be punished in criminal court, civil court, or by administrative agencies.

The penalties for insurance fraud in Colorado vary depending on the specific circumstances of the case. If an individual commits insurance fraud by misappropriating premium funds, it is typically considered a class 5 felony. This carries penalties of up to 3 years in prison and fines of up to $100,000.

Insurance agents who misappropriate premium funds also face disciplinary actions, such as losing their professional licenses. Additionally, insurance companies that commit fraudulent acts are subject to disciplinary action by the commissioner of insurance, who has the authority to revoke business licenses.

To establish insurance fraud, the prosecution must prove that the perpetrator had an intent to defraud an individual or an insurance company. This is a crucial element of insurance fraud cases, and without it, the case may be dismissed.

Frequently asked questions