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Kentucky Insurance Fraud Laws

Insurance fraud is essentially an attempt to improperly benefit from an insurance policy. The offender can be either the insured party or the insurer. Most insurance fraud can be classified as either "hard fraud" or "soft fraud." Hard insurance fraud occurs when someone intentionally fakes an accident, injury, theft, or arson in order to illegally collect from an insurer. Soft insurance fraud is also illegal and exists where a policyholder exaggerates the extent of their injury or loss in order to pad their insurance claim.

Both hard and soft insurance fraud is criminalized under Kentucky's main insurance fraud law, the Fraudulent Insurance Act. The following chart illustrates the key points of this act.

Code Section

Kentucky Revised Statutes section 304.47-020: The Fraudulent Insurance Act

What's Prohibited?

A person or entity engaging in any of the following knowingly and with the intent to defraud:
  • Preparing or presenting any false, incomplete, or misleading statement as part of an insurance claim (or other benefit) under an insurance policy
  • Making false statements on an insurance policy application
  • Entering into any agreement that violates this section of the law,
  • Receiving money in order to purchase insurance and then failing to purchases insurance
  • Failing to make insurance payments as required by an agreement or legal obligation
  • Issuing or falsely presenting fake insurance policies, certificates of insurance, insurance identification cards, insurance binders, or any other document intended to evidence insurance
  • Making false representations about the death or disability of a policy holder in order to fraudulently obtain money from an insurer
  • Engaging in unauthorized insurances
  • Preparing or presenting a false statement to an insurer concerning any of the following; the rating of an insurance policy, the financial condition of an insurer, the acquisition or dissolution of an insurer within Kentucky, or a document filed with the commissioner
  • Soliciting or accepting new insurance risks on behalf of an insolvent insurer, or concealing the money, records, or other property of an insurer, or
  • Assisting or conspiring with another to commit a fraudulent insurance act in violation of this section

Felony Offenses Related to Kentucky's Fraudulent Insurance Act

Any person who is convicted under the Fraudulent Insurance Act and then knowingly participates in the insurance business in Kentucky is guilty of a Class D felony. It is also a crime for an insurer to knowingly permit the offender to participate in the insurance business after being convicted. However, an offender may again participate in the insurance business in Kentucky if he or she receives consent from the commissioner.

Reporting Possible Fraudulent Insurance Acts

Under Kentucky's fraudulent insurance laws, some people are required to report suspected fraudulent insurance acts. The groups of people who are required to report possible fraudulent insurance acts include:

  • Professional practitioners licensed or regulated by Kentucky (except as provided by law)
  • Private medical review committees
  • Insurers, agents, or other people license under this chapter, and
  • Any employee who works for one of the above mentioned people or groups of people

All other people aren't required by law to report suspected fraudulent acts but are encouraged to do so. All informants (as long as they didn't act maliciously, fraudulently, or in a grossly negligent manner) won't be held liable for slander, libel, or any other relevant tort because of their report.

Additional Resources

State laws change frequently. For case specific information regarding Kentucky's insurance fraud laws contact a local insurance attorney.

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