Insurance Fraud

Penal Code 550—California Insurance Fraud Laws 

Insurance fraud is a crime in California and a conviction can come with some very serious penalties. The law defines insurance fraud in a number of different ways, most of which are set forth in California Penal Code Section 550. 

How can I be convicted of Insurance Fraud in California? 

Penal Code Section 550 describes several different versions of insurance fraud, all of which involve the use or preparation of false information to an insurance provider. To be guilty of insurance fraud, the prosecution has to prove, beyond a reasonable doubt, that you: 


  • Presented or prepared a false or fraudulent insurance claim,
  • Present or prepare a false statement as part of an insurance claim,
  • Withhold information relevant to someone’s insurance coverage or status
  • Participate in a vehicular collision as part of a false or fraudulent insurance claim. 


A person also commits insurance fraud under Penal Code Section 550 when they “conspire” with others to do the above, or otherwise “aids” or “abets” someone in doing the same.

Legal Defense strategies to an Insurance Fraud Charge

The prosecution has to prove every “element” of an insurance fraud charge beyond a reasonable doubt. This means that they have to prove, not only that you helped submit false information to an insurance company, but also that you did so on purpose-that you “knowingly” presented false information, and that you did it with the “intent to defraud.” If the jury has any reasonable doubt as to either of these factors, then this should result in a “not guilty” verdict. Below are the most common forms of defenses to an insurance fraud charge. 

You did not “knowingly” provide false or fraudulent information

A person does not commit insurance fraud just by giving wrong information in connection with a claim. That person must know that the relevant information is false when they give it. This makes sense because the law is not meant to punish honest mistakes. 


Consider a situation where a person accidentally miscalculates the value of damage to a car, or otherwise relies on the opinion of an apparent expert in the field like a mechanic or a property estimator. In all of those situations, incorrect information will be transmitted to an insurance company in connection with a potential claim. But none of these situations should result in a conviction for insurance fraud, because the defendant did not “know” that the information transmitted was false, and as such, the defendant “did not act knowingly.’

You did not have the “intent to defraud”

Although the language of Penal Code Section 550 does not explicitly say so, the prosecution has to prove that the defendant “intended to defraud” or had “fraudulent intent” in order to secure a conviction for insurance fraud. A person “intends to defraud” when they intend to deceive someone else into a loss of money, property, or change in legal status. Like the “knowingly” requirement described above, the “fraudulent intent” element is meant to ensure that the law only punishes people who act on purpose. 

If you honestly believe that the information you are giving to the insurance company is correct, then you likewise believe that you aren’t “cheating” anyone out of their money. As such, a defense to an insurance fraud case based on the “fraudulent intent” argument will probably cover much of the same issues as a defense based on the “knowingly” requirement of the elements of proof. In theory, it is possible that someone could “knowingly” send false information to an insurance company without also planning to trick the company or its customers out of money, but it might be hard to imagine a case where this defense is credible.  Otherwise, consider again the above-described examples where a person gave incorrect information to an insurance company based on an honest mistake or by relying on an expert. Because none of those people “knew” that they were giving wrong information to insurers, they also did not “intend to defraud” anyone when they acted, either.

Punishment for Insurance Fraud Under California Law

Is Insurance Fraud a Felony or Misdemeanor? 

Depending on what type of insurance fraud you are charged with, your case could be categorized as either a misdemeanor or a felony. This is because Penal Code Section 550 contains several different sub-sections, each of which defines a different type of insurance fraud crime. Some of these crimes can only be charged as felonies. Other sub-sections, however, are “wobblers” which means that they can be charged as either misdemeanors or felonies. 

As a FELONY, insurance fraud in California is punishable by

  • A period of two (2), four (4) or five (5) years of incarceration and, 
  • $50,000 in fines or double the amount of the fraud, whichever is greater. 

As a MISDEMEANOR, insurance fraud in California is punishable by:

  • A period of one (1) year incarceration 
  • plus $10,000 in fines or double the amount of the fraud, whichever is greater.

A person convicted of insurance fraud can still be placed on probation, however. If a conviction seems inevitable, you should confer closely with your attorney on ways to secure a probationary sentence.


Staging a Car Accident: 

It should be noted a charge of insurance fraud based on a staged car accident is a “straight felony.” As such, this type of insurance fraud offense is subject to certain types of “enhancements” that can significantly increase the amount of time in custody that someone might face. 

  • An additional two (2) years of incarceration is possible when someone suffers “serious bodily injury” and
  • Up to three (3) to six (6) years can be added where someone suffers “great bodily injury” from an accident staged as part of an insurance fraud scheme.

Diversion for Insurance Fraud Charges

There is yet another way to avoid jail time and many of the other stiff penalties associated with an insurance fraud conviction. “Diversion” is one such way, and it might be an option for someone facing insurance fraud charges in California.

Diversion occurs when the prosecutor and defense agree to “suspend” the case and see if the defendant fulfills certain conditions. These could include things like: 

  • Community Service
  • Completion of Counseling 
  • Payment of restitution owed 

Once these conditions are fulfilled, the prosecutor would then agree to dismiss the charges, thereby saving the defendant from the traditional penalties and even from the stigma of a criminal conviction. 

In this way, a defendant’s case is “diverted” from the usual path of a criminal case in order to accommodate a special agreement with the prosecutor. However, be aware that the prosecutor still has to agree to this course of action for your case. Your attorney may be able to negotiate “diversion” for your insurance fraud case based on specifics about your record, your culpability in the case (if any), any facts about your background, and, of course, the case itself. 

Related Offenses:

  • Penal Code 550—California Health Care Fraud
  • Vehicle Code 10501: Making a false report of vehicle theft 

Hiring a VIRTUOSO CRIMINAL & DUI LAWYERS Criminal Defense Attorney   

If you are facing insurance fraud charges in the San Francisco Bay Area, we encourage to consult with an attorney right away before speaking to anyone else. Our job is to reduce your stress and work with you in earning the best possible outcome, whether that be a dismissal or a plea deal. 

 If you are ready to discuss your case, contact our Fraud lawyers at (510) 988-5566 for a free and confidential consultation.