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Insurance Fraud Penalties in Texas

Criminal Law Blog by The Law Office of Greg Tsioros

Insurance Fraud Penalties in Texas

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Insurance Fraud Laws in Texas

Nearly everyone who resides in the state of Texas has some form of insurance. Whether it’s health insurance, car insurance or another type, getting the proper coverage is a fact of life for most people. Keeping a good insurance policy implies that the insured person will follow all the rules of their policy.

When someone deliberately violates the rules of their insurance policy for financial gain, they may be charged with insurance fraud. Insurance fraud is a complex crime that can entail a wide variety of circumstances. No matter what the details of a case may be, a conviction for fraud can have serious consequences.

What Is Insurance Fraud?

To put it simply, insurance fraud is any attempt to receive a payout from an insurance company under false pretenses. Insurance is intended to provide financial coverage in the event of an accident or an unforeseen event. Intentionally fabricating such an event or exaggerating the details of such an event is considered insurance fraud.

For example, a classic type of insurance fraud involves fabricating or exaggerating injuries in a car accident for a bigger financial payout. Suppose that Alice is rear ended while waiting at a stoplight. She is knocked forward and bangs her head on the steering wheel, resulting in minor bruising and lacerations. However, after the accident, Alice claims that her neck was fractured, her shoulder was displaced and she suffered internal bleeding, although none of that was true. Alice is trying to get a bigger financial payout from the accident and is committing insurance fraud.

Soft Vs. Hard Fraud

There are two main types of insurance fraud: hard and soft. The difference between the two is found in the actions that are committed in the commission of the fraud.

  • Soft fraud

This type of fraud involves a person who distorts the truth regarding an event that could have an insurance payout. For example, overstating the severity of injuries suffered in an accident.

  • Hard fraud

This type of fraud involves deliberate attempts to create situations that could have an insurance payout. For example, a person who burns down their own house and attempts to make the fire look like an accident for an insurance payout is committing hard fraud.

Legal Penalties

In Texas, the legal penalties for fraud are usually based on the amount of money involved in the case. This amount of money is derived from the amount of the claim that was paid out or sought by the defendant in a particular fraud case. For example, a person who files a fraudulent claim for reimbursement on a damaged item worth $25 may be punished less severely than a person who burns their house down for a settlement.

Insurance fraud regarding an item worth $50 or less is a Class C misdemeanor, punishable by:

  • A $500 fine

A fraudulent insurance claim for an item that is valued at $200,000 or more, such as a house, can lead to a conviction on a first degree felony charge. This is punishable by:

  • Five to 99 years in a prison
  • A fine of up to $10,000

Supplying false information on a claim for insurance is a state jail felony, punishable by:

  • Up to 180 days in jail
  • A fine of up to $10,000
Legal Defenses

In order to convict someone of insurance fraud, the state prosecution must prove beyond a reasonable doubt that the defendant intentionally and knowingly supplied false information with the intent of receiving a financial payout. In other words, the prosecution must prove that the defendant’s actions were not the result of a simple error or miscalculation.

A defense attorney can use this opportunity to cast doubt on the prosecution’s claims. An attorney may use documents and witness statements to show that the defendant simply made a mistake and did not intentionally try to defraud an insurance company. This may lead the jury to issue a verdict of not guilty or the prosecution may offer a plea deal to a lesser sentence.


Being charged with any form of fraud can be a scary experience. It’s important to protect your legal rights when accused of any crime. Houston attorney Greg Tsioros can help you. Contact his office today at 832-752-5972.

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