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What You Need to Know About Insurance Fraud in Texas

Everything is bigger in Texas. Unfortunately, that sometimes includes insurance fraud schemes. From health care provider fraud to unlicensed insurance policy sales, insurance fraud is alive and well in the Lone Star State. Let’s take a look at insurance fraud in Texas, how to report it if you see it, and what lawmakers are doing to protect Texans from being unwittingly implicated in homeowner’s insurance fraud.

What is Insurance Fraud?

Insurance fraud is an intentional deception committed by applicants, policyholders, claimants, providers, agents and company employees for financial gain. Not only is it dishonest, it is expensive for everyone, including innocent policyholders. Because fraud is expensive to investigate and prosecute, insurance premiums go up to offset the insurance company’s cost, unfairly penalizing honest customers.

Common Texas Insurance Fraud Schemes

It seems that criminals get very creative when it comes to defrauding insurance companies. Those looking to become licensed insurance adjusters through 2021 Training would do well to learn how to recognize some of these common schemes.

  • Health Care Provider Fraud. This fraud occurs when doctors or hospitals over-bill insurance companies for medical services. They do this by running unnecessary tests and procedures to pad the bill, or simply by billing for services they did not provide.
  • Auto Accident Fraud. Common auto accident fraud schemes involve padding insurance claims, filing claims when no accident occurred, or enlisting the help of an accomplice to carry out an intentional collision with the intention of filing a claim.
  • Mortgage Fraud. It is fraud when a borrower over reports their income or makes other misleading statements in an attempt to obtain a home loan they do not qualify for.
  • Homeowner’s Insurance Fraud. A gray area in Texas law has some unscrupulous roofers promising to waive insurance deductibles in exchange for work. Any homeowner who agrees to these terms is committing insurance fraud, even if they are unaware. A bill has been drafted to make these promises illegal, but it is still waiting for the governor’s approval.

Insurance Fraud Penalties

Texas law is very tough on insurance fraud. Depending on the amount of money involved, perpetrators could end up with a felony on their record and a crime of moral turpitude that will haunt them whenever they try to apply for certain jobs or trusted positions in the community.

Sentences for insurance fraud in Texas range from a Class C misdemeanor and a $500 fine if the value of the claim is less than $50, to a first-degree felony and a possible life sentence if the claim is worth $200,000 or more. The bottom line? When it comes to insurance fraud, don’t mess with Texas.


How to Report Insurance Fraud in Texas

If you know or suspect that someone has committed insurance fraud, you must report it within 30 days. Texas law protects those who report fraud in good faith. You may make your report to the Texas Department of Insurance’s Fraud Unit or the Texas Attorney General’s Consumer Protection Hotline at 1-800-621-0508.

Become a Licensed Insurance Adjuster with 2021 Training

If Texas insurance interests you and you’d like to make a living in the insurance industry, come take our adjuster courses at 2021 Training. Our curriculum is a one-of-a-kind, fully online course developed by adjusters who have real experience in the field.

We teach more than just law and theory; our goal is to share our own experiences as adjusters to prepare our students for the challenges they will face on the job. You can complete your training online, at your own pace. We even offer the licensing exam at the end. Call us today to learn more about a career as a licensed insurance adjuster in Texas.

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