Our lawyers specialize in federal white collar crimes and various forms of government investigations.  

What is Property Insurance Fraud?

Property Insurance fraud is a specific form of insurance fraud. It involves intentionally destroying insured property in order to collect insurance on that property. One of the most serious forms involves the actual destruction of insured property.


An arsonist burning down an insured building in order to collect payment under a fire insurance policy.

Types of Property Insurance Fraud

  • Impersonation of federal law enforcement officials;
  • Identity theft;
  • Contractor Fraud;
  • Debris removal fraud;
  • Property insurance fraud cases after hurricanes like Katrina and Sandy; or
  • Fraudulent submission of claims to insurance companies and the federal government.

Federal law has jurisdiction over insurance fraud that affects interstate commerce[1], however, each state may have additional elements. Depending on the specific facts and circumstances surrounding property insurance fraud, one can face very serious consequences, including jail time, and substantial fines and penalties.

What Does the Prosecutor Have to Prove?

In order to be convicted of property insurance fraud, prosecutors must prove that you:

  1. Knowingly made a false or misleading statement;
  2. The statement was made in connection with a claim or payment; and
  3. The statement is material (in other words the statement can impact the ultimate outcome of a claim

If you would like to speak to a federal financial crimes attorney who is experienced in defending against allegations and investigations of property insurance fraud or any of the related crimes described below, contact us for a legal review of your case.

What is “Property Insurance Fraud?”

One of the main reasons anyone commits property insurance fraud is to gain financially.

Some common forms of property insurance fraud occur when, with the intent to obtain improper payment from an insurer, and individual commits:

  • Arson of a building or dwelling;
  • Vandalizing a building or dwelling;
  • Staging a theft or burglary of insured property;
  • making fraudulent representations regarding the nature and value of property lost or damaged.

Two Categories of Insurance Fraud

There are many types of insurance fraud, but generally, property insurance fraud is categorized into two categories.

Hard Fraud

Hard fraud occurs when a person has purposeful intent and commits one of the many actions outlined above, with the purpose of gaining false compensation from insurance companies.


The owner of a restaurant pays two teenagers to burn down her business in order to collect on the insurance policy.

Soft Fraud

“Soft fraud” (also called “opportunistic fraud”) on the other hand, involves unplanned activities and are the most commonly seen. This is a type of fraud in which the perpetrator tells lies, or exaggerates the truth (usually the extent of damage in order to receive greater compensation from the insurer.)


Lying about the number of items destroyed in a flood, or exaggerating the value of your grandma’s favorite necklace lost in a house fire.

Fraud By the Insurance Company

Additionally, many people forget that insurance fraud can also apply to an insurance company knowingly denying benefits that are, in fact, due.

Crimes Related to Property Insurance Fraud

Property fraud is rarely the only charged filed against a defendant.  Depending on how the fraud is carried out, the prosecution can bring additional charges against the perpetrator.

Civil Actions and Investigations

According to 18 U.S.C. § 1034, the Attorney General may bring a civil action in the appropriate United States district court against any person who commits property insurance fraud.

Generally, if a case involves arson or other criminal acts, then criminal charges will also be brought against the fraudulent party.

Federal Agencies Responsible for Investigating

The federal agencies responsible for enforcing federal insurance fraud crimes include:

  • Federal Bureau of Investigation (FBI)
  • Department of Justice (Attorney General’s Office)
  • District Attorney’ Office (state and federal prosecutors)


Insurance fraud can be reported by contacting one or more of the following entities:

  • The State’s Fraud Bureau
  • The Insurance Company being defrauded
  • Medicaid or Medicare if they were the agency involved
  • The State’s Medical Board, if a provider or insurance company committed the fraud
  • The National Insurance Crime Bureau at 1-800-TEL-NICB (1-800-835-6422)


The penalty one faces in a property insurance fraud case generally depend on factors like the amount of loss that occurred due to the fraudulent activity and the laws of the state where the alleged fraud occurred.

Penalties for violating 18 U.S.C. § 1033 by knowingly and, with the intent to deceive, makes any false material statement for the purpose of insurance fraud, include a civil penalty of not more than $50,000 for each violation OR the amount of compensation which the person received or offered prohibited conduct (whichever amount is greater).

Best Defenses

There was no fraudulent knowledge or intent (“Good-Faith” Defense).

The deciding factor in these cases is your knowledge of the statements and representations made, and your intent to defraud an insurer or entity.

If you lacked the knowledge or intent to fraudulently deprive an insurance company of certain funds or proceeds, you might be able to establish the “good faith” defense.

Four Year Statute of Limitations for Property Insurance Fraud Offenses

The statute of limitations for fraud is generally four years.  

Unless an indictment is filed within 4 years after the commission of your alleged property insurance fraud, you cannot be prosecuted, tried, or punished for violating § 1033.

Property Insurance Fraud Cases in the News

Homeowners Forced to Pay $4 Million Judgment in Property Insurance Fraud

In one particular case, a fire destroyed a 20,000 square foot home shortly after construction was completed. The home was insured by a company called Auto-Owners.

The insurance policy contained something called a “Concealment or Fraud” provision, which stated the following:

This entire policy is void if, whether before, during, or after a loss, any insured has:


  • Intentionally concealed or misrepresented any material fact or circumstance;
  • Engaged in fraudulent conduct; or
  • Made false statements or representations related to this insurance;”



The insurer, Auto-Owners made several payments under its policy with the homeowners. It paid up to its policy limit in excess of approximately $4 million to the homeowners based on their representations regarding the fire damage.

Meanwhile, the homeowners sent letters to the insurance company requesting additional payments. The homeowners attached fake invoices with forged signatures and fraudulent checks. They also included fifteen invoices for subcontract work allegedly completed on the property. There were several pages with photocopies of the cancelled checks, which showed invoiced paid to a company that was formed by the insured’s daughter after the fire. The insurance company sought additional information in responses.

Ironically, it was the homeowners who filed suit against the insurance company, claiming breach of contract and refusal to pay.

Once the insurance company hired a forensic accountant to analyze the information provided and took deposition testimony, it was discovered that the $4,318,000 of the homeowners claimed was used for repair of the property was actually fictitious.

They also found that the contracting fees were never paid, invoices did not reflect actual services rendered, and the check issued to workers were in actuality deposited into the homeowner’s account. In fact, the insurance company found that the most spent on the reconstruction of the home was about $1,700,000.

The insurance company filed a counterclaim, and the court ultimately found that the homeowners violated the “Fraud and Concealment” provision of the insurance policy. The court found that the homeowners violated the policy in “every way possible,” by intentionally concealing, misrepresenting material facts, and making false statements about the property damages, costs of repair, work performed, and payments received.

As a result of the court’s findings, and the homeowner’s actions, not only were the homeowners barred from all coverage under the insurance policy, but the insurance company was entitled to recover all amounts they had previously paid out.

Call a Property Insurance Fraud Attorney You Can Trust

With many years of combined experience in all federal judicial practices and procedures, our comprehensive attorney-team approach ensures an aggressive criminal defense and the best outcome for each of our clients.

We have defended public companies and private individuals and will strive to protect you, your family, and your rights from charges and accusations of fraud.  

If you have been charged with Property insurance fraud or a related financial crime, call an insurance fraud attorney today.

[1] 18 U.S.C. Chapter 47 Fraud and False Statements