An Auto insurance policy with a car key on top of it and a 100 dollar bill at the upper right side.

What Are the Consequences of Insurance Fraud?

Potential consequences of insurance fraud depend on whether the offense gets reported to the police for investigation and prosecution. An insurance company may detect fraud and decide to address the issue internally by rejecting the application, canceling the policy, or denying the claim. Alternatively, it may or may not notify the police of the alleged fraudulent activity. 

An Auto insurance policy with a car key on top of it and a 100 dollar bill at the upper right side.

Punishments for insurance fraud reported to the police and successfully prosecuted include jail time, or fines, or both. The court might also order restitution if the insurance company incurred financial losses because of the defendant’s fraudulent actions. 

What Is Insurance Fraud?

Insurance fraud is the unlawful act of obtaining insurance payment or other forms of gains through deception. This offense is common and affects nearly all insurance policies, including health, auto, and life. 

Individuals from different social classes can commit this offense. Lawyers, healthcare professionals, car salespersons, and individuals in positions of authority are often charged with insurance fraud. 

Individuals within the insurance sector also commit certain forms of insurance fraud offenses. For instance, insurance adjusters have been convicted of insurance fraud for exaggerating estimates in exchange for kickbacks. Similarly, insurance agents have also been convicted of insurance fraud for embezzling insurance premiums. 

Insurance fraud cases often involve a single criminal defendant. Sometimes, however, they may include multiple defendants if the authorities allege several individuals worked together to commit the scheme. For example, the prosecution may charge several medical facility employees it alleges collaborated to carry out Medicare fraud. 

To prosecute white-collar crimes, the state will need to show that the alleged deceit occurred. In cases of more than one defendant, the prosecution may also need to draw a connection between the defendants. 

The statute of limitations for prosecuting insurance fraud offenses in Minnesota start running from the date the insurance company or police discovered the fraud. No prosecution can, however, start more than seven years from the date of the alleged criminal act.

Main Categories of Insurance Fraud 

Fraudulent Non-Disclosure 

This insurance fraud category covers failure to provide an insurance company with information that might impact its decision to insure you or settle a claim. The failure to disclose certain pertinent information can be intentional or unintentional. For instance, the company may consider your failure to include a DWI conviction in an auto insurance application as fraudulent non-disclosure. Keep in mind that even unintentional non-disclosure can sometimes result in insurance fraud charges. 


This fraud usually occurs when a person is filing a claim to recover compensation for a covered loss. It involves overstating the extent of the damage or value of the covered loss to obtain a higher payment from the insurer. 

If a healthcare professional inflates the cost of treatment or the services performed to collect more money, it may result in insurance fraud charges. Some healthcare insurance frauds stem from falsifying patient medical records and diagnostic reports intentionally. Others arise from unintentional mistakes during the billing process. 

Minnesota insurance fraud and irregularities defense lawyers have seen genuine billing mistakes result in insurance fraud charges. Involving these lawyers shortly after getting charged or discovering that the police are investigating you for health insurance fraud can help avoid a conviction and protect your professional license and future. 

Deliberate Fraud

This insurance fraud category covers an intentional effort to obtain financial gain from the insurer through deceitful tactics. An example of deliberate fraud includes staging a car accident to receive payment from the insurer. 

The Consequences of Insurance Fraud

Insurance Application Rejection

An insurance company can reject your application if it confirms that you provided false information. People lie on an insurance application to be eligible for lower premiums, life insurance coverage, and higher compensation amounts.

Unintentional omissions of information usually do not result in insurance application rejection. Intentional omissions of fact amount to insurance fraud and often lead to application denial.  

Insurance Policy Cancelation 

An insurance company can cancel or decline to renew a policy if it discovers that you lied on the application. It can also cancel your policy if you make a fraudulent claim. Policy cancelation makes you a high-risk client. Obtaining insurance coverage in the future can be difficult and costly if insurance companies consider you a high-risk client. 

Insurance Claim Denial 

An insurer can deny a claim on the grounds of fraud. The insurer will gather evidence to support its decision in the event of a bad-faith insurance lawsuit. 

Fines and Prison Time 

Insurance fraud incidents often result in criminal charges when law enforcement officers get notified and conduct investigations. Penalties for insurance fraud convictions usually include fines, prison time, or both. 

The severity of the penalties for insurance fraud in Minnesota varies with the amount of money obtained fraudulently. In other words, the more money gained through fraudulent actions, the longer the maximum jail time or the heftier the fines. 

  • Insurance Fraud of Less Than $500: This offense carries up to 90 days in jail and a fine of up to $1,000. This punishment seeks to deter a criminal defendant from a similar crime in the future by putting the defendant in a worse financial situation than in the pre-fraud period.
  • Insurance Fraud of $500 to $1,000: This offense carries up to a year in prison and up to $3,000 in fines. 
  • Insurance Fraud of $1,000 to $5,000: The consequences of insurance fraud increase fivefold immediately after the amount involved crosses the $1,000 mark. A conviction of this offense results in up to 5 years in prison or up to $5,000 in fines, or both.
  • Insurance Fraud of $5,000 to $35,000: This offense carries up to 10 years in prison and up to a $20,000 fine. More severe penalties may apply if a prior conviction of a similar crime exists in your criminal record. 
  • Insurance Fraud of more than $35,000: This offense level usually results in up to 20 years in prison and up to a $100,000 fine. 


The court may order the defendant to return the unlawfully obtained insurance payment. Courts usually order restitution on top of a fine, jail time, or both. 

Potential Defenses for an Insurance Defense Charge 

Minnesota insurance fraud lawyers are conversant with numerous legal defenses that can help alleged offenders avoid an insurance fraud conviction. Of course, the best legal defense for your unique situation will depend on the facts of your case. Common defenses for insurance fraud cases include: 

No Knowledge of Falsity 

An insurance fraud conviction cannot materialize if you did not know that you were providing false information. Your lawyer could adopt a lack of knowledge defense if you were unaware your statements or writings were false. 

An example is when you fill out your insurance paperwork with false information obtained from another person. The lack of knowledge defense would apply in your case if you were unaware the information was untrue. 

No Intent to Deceive or Defraud 

Intent to obtain insurance payment fraudulently must exist for you to be convicted of insurance fraud. The lack of intention defense can apply to your case if you provided a false claim accidentally. 

For instance, you submit your insurance paperwork instead of saving it for further review. As a result, you give incomplete or inaccurate information. In this case, your defense lawyer can argue that you had no intention of making a false claim. 


This defense applies to cases where law enforcement officers compel or encourage alleged offenders to make a false insurance claim. You could use this defense if a law enforcement officer asked you to submit a fraudulent insurance claim to help investigate a specific insurance provider. 


This defense could apply to your case if someone forced you to engage in fraudulent insurance acts by threatening you or a loved one. For instance, a violent street criminal asks you to hit a car so that he or she can collect an insurance payment. The criminal then threatens to kill you or your spouse if you do not cooperate. In this situation, your lawyer can conduct investigations, gather sufficient evidence, and present a strong duress defense.

Mistaken Identity         

This defense involves claiming that someone else must have completed the deceitful insurance paperwork and signed your name. Your lawyer may use this defense if there are no pictures, video recordings, eyewitnesses, or other direct proof that you completed and filed the fake insurance paperwork. 

Withdrawal from Conspiracy 

This defense applies to cases where prosecutors accuse several people of conspiring to carry out an insurance fraud act. You can raise the withdrawal defense if you deliberately pulled out from the conspiracy before the criminal act happened.

You may use the withdrawal defense if you persuaded other people involved in the conspiracy against committing the crime. Likewise, you can also raise this defense if your actions were unrelated to the conspiracy. A lawyer with a proven record of handling insurance fraud cases involving conspiracy can review your case to determine if the withdrawal defense will be effective to avoid the consequences of insurance fraud.

Max Keller has won countless jury trial cases involving misdemeanors and felonies, sex crimes, and DWI’s. He is a member of the Minnesota Society for Criminal Justice, which only allows the top 50 criminal defense attorneys in the state as members. Max is a frequent speaker at CLE’s and is often asked for advice by other defense attorneys across Minnesota.

Years of Experience: Approx. 20 years
Minnesota Registration Status: Active
Bar & Court Admissions: State of Minnesota Minnesota State Court Minnesota Federal Court 8th Circuit Federal Court of Appeals State of Maryland

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