Insurance fraud is an affirmative defense used by insurance companies to deny claims.  The burden of proving fraud to deny an insurance claim is not as stringent as it is to prove insurance fraud for a criminal conviction.  This post is intended only to generally inform the reader of the statute that governs the Class E and Class D felonies of insurance fraud in the State of Missouri and describe how insurance companies use this defense to deny insurance claims.  It is not to be construed as legal advice.

According to the Missouri Revised Statutes:

375.991.  1.  As used in sections 375.991 to 375.994, the term “statement” means any communication, notice statement, proof of loss, bill of lading, receipt for payment, invoice, account, an estimate of damages, bills for services, diagnosis, prescription, hospital or doctor records, x-rays, test results or other evidence of loss, injury or expense.

2.  For the purposes of sections 375.991 to 375.994, a person commits a “fraudulent insurance act” if such person knowingly presents, causes to be presented, or prepares with knowledge or belief that it will be presented, to or by an insurer, purported insurer, broker, or any agent thereof, any oral or written statement including computer-generated documents as part of, or in support of, an application for the issuance of, or the rating of, an insurance policy for commercial or personal insurance, or a claim for payment or other benefits pursuant to an insurance policy for commercial or personal insurance, which such person knows to contain materially false information concerning any fact material thereto or if such person conceals, for the purpose of misleading another, information concerning any fact material thereto.

6. A fraudulent insurance act for a first offense is a class E felony. Any person who is found guilty of a fraudulent insurance act who has previously been found guilty of a fraudulent insurance act shall be guilty of a class D felony.

7. Any person who pleads guilty or is found guilty of a fraudulent insurance act shall be ordered by the court to make restitution to any person or insurer for any financial loss sustained as a result of such violation. The court shall determine the extent and method of restitution.

8. Nothing in this section shall limit the power of the state to punish any person for any conduct that constitutes a crime by any other state statute.

Be reminded that acts of fraud, both civil and criminal, include the application for the insurance policy as well as the filing of an insurance claim.  

When the policyholder makes false statements or conceals material facts or evidence when applying for insurance coverage or during the course of a claims investigation with the intent to deceive the insurance carrier, it is not necessary for the insurer to actually pay the claim for the act of fraud to be committed.  Courts have held that fraud attempted, even when the policyholder argues that he was merely using negotiation tactics, is still fraud.

As for the claim, fraud in any aspect of a claim is a bar to coverage for the entire claim.  This means if a policyholder made a material misrepresentation about his loss from fire of personal property but made no misrepresentation about damage to his house, the claim can be denied for BOTH the personal property and the house.

If you are handling your claim on your own and without the assistance of an attorney or public adjuster, it is important to be aware and understand that your words matter.  Since misrepresentation and fraud are defenses that allow the insurance carrier to deny a claim, there is a significant financial incentive for the adjuster conducting the investigation to discover or interpret certain acts and information, accordingly.  Be truthful, precise, and present to the insurance company only what you know to be true.