Everyone knows that torching a car and lying about it to your insurer to get a payout is fraud - and that you'll pay dearly if you're convicted. But fibbing to your insurer about less explosive things -- your marital status, your child's grades, where you garage your car -- for financial gain is also fraud and can have serious consequences.
Take the recent case of Maria Demeter, a Hillsborough, N.J., woman who prosecutors say falsely claimed that she lived by herself since 1999 to save almost $35,000 on her auto insurance policy. She'd actually been living with her husband, whose lousy driving record would have raised her premiums, according to
Demeter pleaded guilty this week to insurance fraud and may be ordered to pay about $39,000 in restitution, plus about $4,000 for a phony claim made more than two years ago. The court also tacked on 50 hours of community service. She will be sentenced Feb. 1. (See: "
8 ways to get busted for auto insurance fraud
Everyone pays for your car insurance fibs
Pete Moraga, spokesperson for the Insurance Information Network of California (IINC), says the media usually focus on more sensational incidents of "hard" fraud like accident scams run by crime rings.
"Most people think of insurance fraud as the headline-grabbing crimes of staged auto accidents and workers comp fraud, but soft fraud is the hardest type for the industry to deal with because it's harder to detect," he explains. "'Claims padding'" is an example. You get rear-ended and claim more pain or injuries than you actually suffered. Your car is damaged, but you urge the body shop to fix dents that never happened.
"These may seem innocent enough -- and perpetrators may think it's a victimless crime. But it really is a crime that everyone with an insurance policy pays for in higher rates. Consequences could be jail time, paying back the fraud costs and the humiliation of going through the legal system," says Moraga.