California Life-Only & Accident and Health AgentCalifornia Law - GeneralMedium
An agent is found to have committed a fraudulent act in connection with an insurance transaction. Under California law, what is the maximum civil penalty per act of fraud that can be imposed on this agent?
- A$1,000
- B$10,000 plus an assessment of not more than the amount of the claim for each act
- C$5,000
- D$10,000
Show answer & explanationAnswer & explanation
Correct answer: B. $10,000 plus an assessment of not more than the amount of the claim for each act
California Insurance Code Section 1871.7 specifies penalties for insurance fraud. For each fraudulent claim, the civil penalty can be up to $10,000, plus an assessment of not more than the amount of the claim for each act.
Why the other options are wrong
- A. This amount is too low for a civil penalty for insurance fraud.
- C. This amount is too low for a civil penalty for insurance fraud.
- D. This only represents part of the potential civil penalty; the assessment based on the claim amount is also crucial.
Civil Penalties for Insurance Fraud (CA)
In California, engaging in insurance fraud can result in significant civil penalties, including a fixed amount per act and an additional assessment tied to the claim value.
- Maximum civil penalty per act is $10,000.
- An additional assessment not exceeding the claim amount can also be imposed.
- These penalties are distinct from criminal charges.
Memory trick: Fraudulent claims cost big, flat fee plus claim-size sting.