Fraudulent Insurance Claims – California Penal Code § 550

California Penal Code § 550 defines and criminalizes insurance fraud. Most commonly, this statute is used to prosecute the knowing submission of false or fraudulent insurance claims for reimbursement.

These cases frequently arise from auto insurance claims but can involve a wide range of alleged conduct.

Insurance fraud prosecutions under Penal Code § 550 are fact-intensive and hinge on whether the accused knowingly made a material misrepresentation during the claims process. Understanding what conduct is prohibited—and what defenses are available—is critical if you are under investigation or facing charges.

What Conduct Is Prohibited Under Penal Code § 550?

Penal Code 550 makes it a crime for any person to knowingly engage in insurance fraud. The statute covers many different forms of conduct, including:

Submitting a false or fraudulent claim for injury or property damage
Making false statements in connection with an insurance claim
Providing false documentation or information to support a claim
Staging or causing an accident to collect insurance proceeds
Submitting multiple claims for the same loss to one or more insurers
Filing claims based on the false theft, destruction, or damage of a vehicle

Importantly, each act of fraud may be charged as a separate criminal offense. A single investigation can therefore result in multiple felony counts.

Material Misrepresentation: The Key Legal Issue

Not every false statement made during an insurance claim constitutes criminal fraud. To support a charge under Penal Code § 550, the prosecution must show that the misrepresentation was material.

A statement is material if it affects:

The insurer's decision to pay the claim, or
The amount of loss or determination of liability

Example of a Non-Material False Statement

If an insured incorrectly states they were wearing a blue sweatshirt during a collision when it was actually black, that statement is false—but irrelevant. It does not affect coverage or valuation and would not support criminal charges, even if knowingly made.

Example of a Material Misrepresentation

If a collision causes $10,000 in damage, but the insured knowingly submits a claim for $100,000, that false statement directly affects the insurer's financial obligation. In that scenario, a filing under Penal Code § 550 would be expected.

Penalties for Fraudulent Insurance Claims (PC 550)

A violation of Penal Code § 550 is generally charged as a felony, carrying severe consequences.

Felony Penalties

If convicted of felony insurance fraud, penalties include:

Two, three, or five years in California state prison
A fine of up to $50,000, or double the amount of the fraud, whichever is greater

“Wobbler” Offenses

Certain false-statement provisions of PC 550 are wobblers, meaning they may be charged as either a misdemeanor or a felony.

Misdemeanor penalties include:

Up to one year in county jail
A fine of up to $10,000

Following California's realignment laws, most prison sentences for PC 550 convictions are now served in county jail, not state prison.

Related California Insurance Fraud Offenses

Insurance fraud cases often involve additional or related charges, including:

Penal Code 451 – Arson
Penal Code 548 – Damaging or Abandoning a Vehicle
Penal Code 549 – Soliciting or Accepting Auto Insurance Fraud Business
Penal Code 550(a)(3) – Causing an Accident to Collect Insurance
Penal Code 550(a)(4) – Submitting Multiple Insurance Claims
Penal Code 551 – Kickbacks from an Auto Repair Shop
Vehicle Code 10501 – False Report of Vehicle Theft

How Insurance Fraud Cases Are Investigated

Insurance companies aggressively investigate suspected fraud. Many carriers maintain Special Investigations Units (SIUs) that work closely with the California Department of Insurance to refer cases for criminal prosecution.

In high-dollar or complex claims, insurers may characterize a legitimate coverage dispute as fraud to avoid paying benefits—particularly when the payout would be substantial.

Defenses to Fraudulent Insurance Claims Charges

Every PC 550 case requires close analysis of the facts, documentation, and communications with the insurer. Common defenses include:

Lack of Knowledge

Insurance fraud requires intent. If the defendant did not know the claim was false, criminal liability does not attach.

For example, if an insured submits a $100,000 claim based on a body shop's inflated or incompetent estimate, the claim may be inaccurate—but not fraudulent if the insured reasonably relied on that estimate.

Good-Faith Dispute Over Coverage

Many cases involve legitimate disagreements about what an insurance policy covers. If the insured genuinely believed the loss was covered, the issue is a civil contract dispute, not a criminal fraud case.

Courts have repeatedly recognized that good-faith disagreements with insurers do not constitute insurance fraud, even when the insurer ultimately denies coverage.

Insurer Mischaracterization

Defense attorneys frequently expose situations where an insurance company has reframed a bona fide coverage dispute as “fraud” to justify the denial of a large claim. These cases are particularly vulnerable to pre-filing intervention and dismissal.

Los Angeles Criminal Defense Lawyer for Insurance Fraud

If you or a loved one has been accused of fraudulent insurance claims under Penal Code § 550, early legal representation is critical.

Our Los Angeles criminal defense attorneys focus on:

Pre-filing intervention to prevent charges from being filed
Challenging SIU investigations and insurer referrals
Negotiating charge reductions or dismissals
Litigating aggressively at the preliminary hearing or jury trial

We have extensive experience defending insurance fraud allegations and exposing weak or overreaching prosecutions.

Contact Cron, Israels & Stark for a confidential case review today.

Related Content:

Auto Insurance Fraud

Insurance Claims