In our state, and in all other states, insurance fraud can happen at the company and insured level. However, in this post, we will focus on the insured.
Inflating value and damages
When one is filing out their insurance paperwork to file a claim, like many of us had to do last February after the freeze, it is tempting to “puff” or inflate values or the extent of damages, or maybe, just tell a small fib. After all, these big, greedy insurance companies can afford it. Unfortunately, Texas treats insurance fraud like any other fraud and routinely criminally prosecutes those who commit it.
Texas Insurance Fraud Statute
The insurance fraud statute in our state is in Texas Penal Code, Title 7, Chapter 35. That statute explains that it is illegal in our state to intentionally defraud, mislead or deceive an insurer. This means the insured cannot purposely submit misleading or false information in a claim on an insurance policy. This may surprise many Texans as we often think of insurance fraud as someone purposely setting their business or home on fire. And, while this is true, in Texas, at least, insurance fraud could be any intentional untruth.
Examples
Intentionally destroying an insured thing, and then claiming it was destroyed by accident is insurance fraud. But, even if the destruction was an accident, lying about anything therein could also be fraud. For example, if the fire completely destroyed a home, and the homeowner claims that they purchased a brand-new appliance for the home, when, in fact, that appliance was never purchased (or it was never installed into the destroyed property), that would likely be insurance fraud.
Defenses
Insurance fraud requires an intent to defraud or deceive. It is a crime that does not exist without the intent to commit it. As such, a common defense is that the deception was purely accidental or unintentional. For example, in our example above, the homeowner could have thought that brand-new appliance was installed, but only found out after the insurance claim was filed that it was not installed into the home. This scenario is possible for a home under construction, and this defense would, essentially, be a mistake of fact.
Of course, a factual defense is another common defense. In a factual defense, the claim is that whatever is claimed to be fraudulent is, in fact, not fraudulent. For our Houston, Texas, readers that have insurance claims, please be mindful and consult a professional, as needed.