The Real Cost of Insurance Fraud: What Hawaiʻi Residents Should Know
Reading Time: 3-4 minutes
Key Takeaways
Insurance fraud is a crime in Hawaiʻi that can result in prison time, sizable monetary fines, and an order to repay any insurance company, agent, or other person for the financial loss they suffered.
You can be charged with fraud just for trying to commit it, even if it does not work.
Hawaiʻi actively prosecutes insurance fraud regardless of profession or background.
Fraud increases insurance premiums for all Hawaiʻi residents.
A fraud conviction can affect your employment, housing, and professional licenses for years.
Insurance fraud happens when someone intentionally lies or hides facts to get insurance coverage or money they do not deserve [1]. Many people think fraud only hurts big insurance companies. That is not true. Every time someone commits fraud in Hawaiʻi, it makes insurance more expensive for honest families and businesses.
Note: Insurance fraud is different from material misrepresentation, which involves providing inaccurate information during the application process.
Examples of Insurance Fraud
After a Car Accident: Filing a claim for an accident that never happened. Saying your car had $5,000 in damage when it really had $1,000 in damage.
After a Tropical Storm: Telling your insurance company that last week's windstorm damaged your roof when it was actually fine. Then using the money for other things.
Getting Coverage After the Fact: Buying insurance after your car gets damaged. Then claiming the damage happened later.
The Penalties Are Serious
Felony Or Misdemeanor Fraud (Depending on the Dollar Amount at Issue)
Prison time [2]
Sizable monetary fines
A permanent criminal record
Other Consequences Beyond criminal penalties, insurance fraud can also result in:
Paying everything back - Courts often order full restitution to the victim of the insurance fraud with interest
Losing your coverage - Your insurance company will likely deny your claim and cancel or non-renew your policy
Higher premiums - Other insurers may refuse to cover you or charge much higher premiums
Employment problems - Many employers conduct background checks
Housing difficulties - Landlords often check criminal records
License issues - Professional licenses may be suspended or revoked
A Recent Hawaiʻi Case
In 2024, a Honolulu police officer was convicted of insurance fraud. After a car accident, he bought an auto insurance policy and tried to claim $6,700 for damage to his previously uninsured vehicle [5]. He was caught and sentenced to community service, fines, and four years of court supervision [5]. This case shows Hawaiʻi investigates fraud thoroughly, regardless of someone's job or position.
How to Report Suspected Fraud
If you see suspicious activity, Hawaiʻi encourages you to report it. Warning signs include:
Accidents that seem staged
Someone pressuring you to inflate damage estimates
Offers to help you file false claims
Buying coverage right before filing a large claim
To report fraud: Visit cca.hawaii.gov/ins [6] or contact the Hawaiʻi Insurance Division at (808) 586-2790 [7]. Your report can be anonymous.
Why This Matters to Everyone
Fraud does not just hurt insurance companies. It hurts all Hawaiʻi residents by driving up insurance costs. When you report claims honestly, you help keep coverage affordable for your community. Hawaiʻi residents already pay some of the highest insurance premiums in the nation. Fraud makes this worse by increasing costs that get passed on to all policyholders.
The Bottom Line
Insurance fraud in Hawaiʻi carries serious penalties: prison time, sizable monetary fines, an court order requiring repayment to victims, and a criminal record that can affect your life for years. Recent cases prove Hawaiʻi enforces these laws. The temporary gain from fraud is not worth the permanent consequences. When you file claims honestly, you are not just following the law. You are helping keep insurance affordable for you and everyone else in Hawaiʻi.
Disclaimer: This article is for general information and education only. It is not legal advice. Laws and penalties can change. Individual situations may vary. For specific legal questions, please talk with a qualified attorney licensed to practice in Hawaiʻi.
Frequently Asked Questions
Q: Can I be charged even if my fraud attempt fails?
A: Yes, you can be charged with insurance fraud just for attempting it, even if you don't receive any money.
Q: Will my insurance company find out about false claims?
A: Yes, insurance companies investigate suspicious claims and share information with law enforcement and fraud databases.
Q: What happens to my policy if I'm caught committing fraud?
A: Your insurer will likely deny your claim, cancel your policy, and you may struggle to find coverage elsewhere.
Q: Are small exaggerations on claims really considered fraud?
A: Yes, intentionally inflating any amount on a claim constitutes insurance fraud under Hawaiʻi law.
Q: How long does a fraud conviction stay on my record?
A: A fraud conviction creates a permanent criminal record that can affect employment, housing, and professional licenses indefinitely.
Sources
Hawaiʻi Department of Commerce and Consumer Affairs, Insurance Division. Motor Vehicle Insurance Fraud. https://cca.hawaii.gov/ins/consumers/filing_a_complaint/mvif/
Hawaiʻi Revised Statutes § 706-660. Sentence of imprisonment for class B and C felonies. https://www.capitol.hawaii.gov/hrscurrent/vol14_ch0701-0853/HRS0706/HRS_0706-0660.htm
Hawaiʻi State Judiciary. Types of Traffic Offenses. https://www.courts.state.hi.us/self-help/traffic/types_of_violations
Hawaiʻi Revised Statutes § 706-640. Authorized fines. https://law.justia.com/codes/hawaii/title-37/chapter-706/section-706-640/
Hawaiʻi Department of Commerce and Consumer Affairs, Insurance Division. Court Sentences Honolulu Police Officer for Insurance Fraud. July 17, 2024. https://cca.hawaii.gov/ins/release-court-sentences-honolulu-police-officer-for-insurance-fraud/
Hawaiʻi Department of Commerce and Consumer Affairs, Insurance Division. Hawaiʻi Insurance Division Homepage. https://cca.hawaii.gov/ins/
Hawaiʻi Department of Commerce and Consumer Affairs, Insurance Division. Contact Insurance. https://cca.hawaii.gov/ins/contact/
