Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Mar 22, 2022

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Key Takeaways

  • Making an injury claim on auto insurance when you’re not hurt can lead to a lawsuit requiring you to pay back your insurance company the funds and additional punitive charges
  • A fraudulent claim could result in you losing your coverage and other insurers refusing to take you on as a client
  • In some states, insurance fraud can lead to a misdemeanor or felony charge

Is it a bad idea to claim injury on car insurance when you aren’t hurt?

The answer is definitely yes. You might think the need for extra cash in your pocket is a valid reason, but this is a bad idea. You could end up losing more than your perceived gains. 

Losing your good faith with your insurance company can prove disastrous in the future when you need compensation for serious injuries. 

The trouble with your insurance company is just one side of the coin. You don’t want to have problems with the law for something avoidable, too. Making a false insurance claim is fraud which would make you a criminal. 

It’s also wise to remember that making insurance claims unnecessarily increases your premiums even when it’s not fraudulent. Making several insurance claims within short time intervals affects your insurance risk factors, so you begin to pay higher rates.

How do bodily injury claims work?

Bodily injury liabilty insurance compensates others financially when they sustain injuries due to an accident that was your fault. 

For example, if you run a red light and hit a cyclist, the cyclist can file for bodily injury against you because you are at fault. In a sense, bodily injury assigns liability to one party. 

If an accident occurs between you and a car with a driver and passengers and the assessment determines you’re at fault, the driver and passengers can all claim bodily injury. 

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How does personal injury differ from bodily injury?

While bodily injury liability covers other people in an accident that was your fault, personal injury protection (PIP) caters to you, the policyholder. In an accident where you sustain injuries, a personal injury protection coverage pays for your medical costs.

Personal injury coverage is not mandatory in many states across the U.S., but it’s advisable to have.

How does car insurance work when you are not at fault for a car accident?

If you reside in a no-fault state, when you get in an accident and you’re not to blame, rather than dealing with the other driver’s insurance company, you file the claim with your own insurance company. 

Your insurance company should compensate you for the losses and damages incurred during the accident. Unfortunately, there are still limitations on the extent of your compensation depending on your coverage limits and deductible. 

Additionally, there’s no guarantee that your insurance company will approve the claim similar to other insurance claims. 

What is personal injury insurance fraud?

You commit personal insurance fraud when you file claims based on inaccurate facts. It can be tempting to exaggerate your injuries to get more considerable compensation, for example. 

Alternatively, you could omit some information that suggests that you caused the accident. For example, you could have been distracted on the road resulting in your accident. 

Any of these situations look like tiny white lies. However, presenting distorted truths and wrongful information while making an insurance claim is fraud. It could land you in trouble with your insurance company and the state. 

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How does personal injury insurance fraud happen?

A common reason why people claim an injury on car insurance when they’re not hurt is because they feel that they’re paying high premiums. They rationalize it as putting back the money into their pockets.

Personal injury insurance fraud can also occur because someone saw an “opportunity” and decided to inflate the claim. For example, people often exaggerate injuries such as back conditions, knee injuries, neck pains, and shoulder problems. The term soft fraud refers to such incidences where a policyholder sees an opportunity to squeeze out more money from the insurance company.

Some people will go the extra mile of staging a car accident so that they can make insurance claims. Such cases carry more weight since there’s premeditation, which falls under the category of hard fraud.  

What happens when you make fraudulent insurance claims?

From a distance, this could look like a trivial issue where you get a one-off payment from your insurance company, but the consequences are not minor.

The first possible consequence would be having the claim declined. Insurance companies deny many claims, so it’s not worth going through the trouble to make a false claim only for it to be rejected. A denial of the claim is the least severe consequence.

If your insurance company discovers your personal injury fraudulent claim, they could instigate a lawsuit against you. The court will require you to repay the money paid out, at the very least. There could also be additional punitive charges, so you’d lose out more financially.

You also risk losing your insurance coverage with the company. Further, states keep records of such cases for a couple of years. So, other insurance companies will see your insurance fraud, making it difficult for you to get an insurance cover with a different company. 

Typically, it’s the insurance company that detects the fraud. Most times, insurance companies will decide to tackle the issue internally. So, they could deny the claim or application or terminate your insurance policy. However, the insurance company can also report the fraud incident to law enforcement. The severity of the fraud often determines what happens next. Law enforcement could charge you with a felony or misdemeanor. 

Can you go to prison for personal injury insurance fraud?

Yes, jail time is a possible consequence. The specific punishments differ from state to state. In some states like Minnesota, false insurance claims can result in jail time of between 90 days and 20 years, depending on the amount involved in the claim.

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The Takeaway on Claiming an Injury on Car Insurance When You’re Not Hurt

It’s bad to claim an injury on car insurance when you’re not hurt. If you feel like you’re paying higher premiums than you can comfortably afford, enter your ZIP code and look for an insurance company that’s within your budget.

Working with an insurance company that fits your needs and budget is essential. You’re less likely to fall into the temptation of insurance fraud. There’s no need to get into trouble with so many choices of insurance companies. 

The consequences of personal injury insurance fraud outweigh the quick paycheck you could be seeking. The possibility of additional punitive charges could leave you in massive debt. Ultimately, the most severe consequence would be losing your freedom. Maintaining honest and transparent transactions with your insurance company is beneficial to you.