Insurance fraud in Maryland means knowingly giving an insurer false or misleading information about something that matters, in a claim, an application or a scheme, to get paid or to pay less. When the claim or act is worth $300 or more, it is a felony carrying up to 15 years.
- Felony $300 or more: up to 15 years Ins. §27-408(a)(1)
- Misdemeanor Under $300: up to 18 months Ins. §27-408(a)(2)
- Fines Mandatory; a judge can’t suspend them Ins. §27-408(b)(3)
- Civil penalty Up to $25,000 per act, plus restitution Ins. §27-408(c)
Jump to: What counts · What the State must prove · Penalties · Workers’ comp · How cases start · Gray areas · Defense questions · If an investigator calls · FAQ
A denied claim is not a crime, and neither is a disagreement with an adjuster about what a repair should cost. Insurance fraud is narrower than most people fear and more serious than most people expect: a knowingly false statement about something material, made to an insurer, carries felony exposure at just $300.
Most cases don’t start with a police officer. They start with an insurer’s special investigations unit, a recorded statement or an examination under oath, and a referral. By the time anyone is charged, the file is usually built. Here is how Maryland defines the crime, what it costs, and what to do if you are on the receiving end of an investigation.
What counts as insurance fraud
Maryland’s insurance fraud law, in Insurance Article §§27-401 to 27-408, lists specific “fraudulent insurance acts.” The ones that come up most:
- False or misleading claims. Giving an insurer a document or statement in support of a claim, knowing it contains false or misleading information about something material. The statute specifically includes false vehicle-theft claims (§27-403(2)).
- False applications. Knowingly or willfully making a false statement on or about an application for insurance (§27-406(1)).
- Staged accidents. Organizing, planning or knowingly taking part in an intentional crash, or in a scheme to paper a crash that never happened, to file an auto claim (§27-407.1).
- Accident “runners.” Soliciting someone injured in a car crash, for personal gain, to hire a lawyer or see a health care provider, or a lawyer or provider paying someone to do that (§27-407).
- Deductible rebates. A home-repair contractor paying or offering to pay any part of your deductible, with intent to defraud the insurer, when the work is paid from the policy (§27-407.2). Since October 1, 2024, this covers any damage to a home, not only weather damage.
- Premium and benefit schemes. Pocketing premiums, overcharging above approved rates, or misappropriating premium funds or policy benefits (§27-403).
- Posing as a licensed professional. Acting as an insurance producer or public adjuster without the required license (§27-405).
The law reaches well beyond traditional insurance companies. It also covers HMOs, nonprofit health plans, the Maryland Automobile Insurance Fund, self-insured employers and the State.
What the State has to prove
The exact elements depend on the section charged, but most cases come down to four questions:
- Was the statement false or misleading? Not disputed, not optimistic, not a different opinion about value. False.
- Did you know it? The claim sections require knowledge. An honest mistake is not fraud.
- Did it matter? The information has to be material to the claim or application.
- Is it connected to you? The State has to tie you to the statement, document or scheme, not just to the claim.
Value matters too. The statute measures “the value of the claim or act that is the subject of the fraud,” not just what the insurer actually paid, and that value decides whether the case is a felony or a misdemeanor.
Penalties
| Offense | Classification | Maximum prison | Fine |
|---|---|---|---|
| False claim, premium or benefit fraud (§27-403), $300 or more | Felony | 15 years | At least $500, up to the greater of 3× the value or $10,000 |
| Other fraudulent insurance acts (§§27-404 to 27-407.2), $300 or more | Felony | 15 years | Up to $10,000 |
| Soliciting accident victims (§27-407), any amount | Felony | 15 years | Up to $10,000 per solicitation |
| Other violations under $300 | Misdemeanor | 18 months | Same fine rules |
Restitution is owed in every case. Fines are mandatory, and each act of solicitation is a separate violation. Source: Md. Code, Insurance §27-408.
Two details make these penalties heavier than they look. The fines are mandatory, so a judge cannot suspend them. And the sentence can run consecutively to a sentence for another crime based on the same conduct, such as theft or arson.
Separately from any criminal case, the Maryland Insurance Commissioner can impose an administrative penalty of up to $25,000 for each act of insurance fraud and order restitution to the insurer, on clear and convincing evidence. The insurer keeps its own right to sue.
Workers’ compensation fraud
Knowingly using a fraudulent representation to affect workers’ comp benefits is a crime under Labor & Employment §9-1106. Instead of its own penalty scale, it borrows the theft penalties, which rise with the amount involved:
| Value involved | Classification | Maximum penalty |
|---|---|---|
| Under $100 | Misdemeanor | 90 days and/or $500 |
| $100 to under $1,500 | Misdemeanor | 6 months and/or $500 (first offense) |
| $1,500 to under $25,000 | Felony | 5 years and/or $10,000 |
| $25,000 to under $100,000 | Felony | 10 years and/or $15,000 |
| $100,000 or more | Felony | 20 years and/or $25,000 |
Workers’ compensation fraud is punished under the theft statute, and a conviction also forfeits the benefits. Source: Md. Code, Labor & Employment §9-1106; Criminal Law §7-104(g).
If the Workers’ Compensation Commission finds fraud, it must refer the case to the Maryland Insurance Administration’s fraud division. Employers can be investigated too, for example for misclassifying workers on an application.
How these cases usually start
Insurers are required to report suspected fraud. Under §27-802, an insurer that in good faith has cause to believe fraud is happening must report it in writing to the Maryland Insurance Administration or to law enforcement, and the law protects good-faith reporters from civil liability.
Those reports go to the MIA’s Insurance Fraud and Producer Enforcement Division, which is staffed by MIA investigators, Maryland State Police and assistant attorneys general. It investigates and refers cases for prosecution to the Attorney General or the local State’s Attorney.
The numbers show how the funnel works. In fiscal year 2025 (July 2024 through June 2025), the division received 6,623 fraud complaints, almost all from insurers. It opened 181 for investigation, referred 34 cases to State’s Attorneys and 20 to the Attorney General, and reported 25 convictions and $18.9 million in restitution. Most complaints never become criminal cases. The ones that do usually arrive with an investigation file already assembled: claim forms, recorded statements, photos, estimates, medical bills and bank records.
Nationally, the Coalition Against Insurance Fraud estimates that fraud across all lines of insurance costs $308.6 billion a year, which is why insurers invest so heavily in finding it.
Where ordinary situations cross the line
The Maryland Insurance Administration’s own consumer guide names the patterns investigators look for, and many of them start as something ordinary:
- inflating the damage from a minor fender-bender, or an injury;
- a body shop or mechanic padding a bill to cover your deductible, or charging for work never done;
- a contractor who offers to “take care of” the deductible after a storm or a burst pipe;
- adding items to a theft or fire claim that weren’t there, or inflating their value;
- faking or exaggerating a work injury, or an employer misclassifying workers to lower premiums;
- staged crashes, from “swoop and squat” setups to deliberately sideswiping a car.
What is not fraud: forgetting an item on an inventory, disagreeing with an estimate, getting a date wrong, or trusting a contractor’s paperwork you didn’t prepare. Those can still draw an investigation, which is why the details of who wrote what matter.
Common defense questions
- Intent. Was it a knowing falsehood, or an error, a misunderstanding or a disagreement about value?
- Authorship. Who actually prepared and submitted the document: you, a contractor, a public adjuster, a body shop, a medical biller?
- Materiality. Did the statement actually matter to the insurer’s decision?
- The full record. Does the entire claim file support the investigator’s summary, or only selected pieces of it?
- Value. Is the amount really $300 or more? That line separates a felony from a misdemeanor.
- How the evidence was gathered. Whether statements, subpoenas and searches were handled lawfully.
If an investigator contacts you
- Don’t destroy, edit or “clean up” anything: texts, photos, receipts, estimates or emails.
- Before a recorded statement or an examination under oath, talk to a lawyer. Your policy may require you to cooperate, so how you do it matters.
- Don’t guess. “I don’t know” is an acceptable answer; a confident wrong one can be treated as a false statement.
- Gather your own copies of the claim file, correspondence, estimates, invoices and payment records.
- Find out who is asking: the insurer’s special investigations unit, the MIA or the police.
Frequently asked questions
Is insurance fraud a felony in Maryland?
Yes, when the claim or act involved is worth $300 or more, or when it involves soliciting accident victims for a lawyer or health care provider. Those carry up to 15 years. Under $300, it is a misdemeanor with up to 18 months (Insurance §27-408).
What happens if I make a mistake on an insurance claim?
A mistake is not fraud. Maryland’s law requires a knowingly false or misleading statement about something material to the claim. Correcting an error promptly and in writing helps show it was a mistake. If you have been accused of fraud, talk to a lawyer before you respond.
Who investigates insurance fraud in Maryland?
Insurers’ special investigations units usually spot it first, and Maryland law requires them to report it. The Maryland Insurance Administration’s Insurance Fraud and Producer Enforcement Division investigates and refers cases to the Attorney General or the local State’s Attorney for prosecution.
Is it illegal for a contractor to cover my deductible in Maryland?
Yes, when it is done with intent to defraud the insurer and the work is paid from the policy. Since October 1, 2024, the rule covers any damage to a home, not only weather damage (Insurance §27-407.2).
What is the penalty for workers’ compensation fraud in Maryland?
It is punished under the theft statute, with penalties tied to the amount involved: up to 90 days for under $100, rising to up to 20 years for $100,000 or more. A conviction also means losing the benefits (Labor & Employment §9-1106).
Talk to a Maryland criminal defense attorney
Insurance fraud cases are paper cases. They are won or lost on documents and statements, and the earlier a lawyer sees them, the more options you have. If an investigator has contacted you or you have been charged, Cochran & Chhabra Law Group offers free, confidential consultations. Request a consultation or call 410.268.5515. Learn more about our criminal defense practice.
Sources
- Md. Code, Insurance §27-401 (definitions)
- Md. Code, Insurance §27-403 (fraudulent claims, premiums and benefits)
- Md. Code, Insurance §27-405 (unlicensed producers and adjusters)
- Md. Code, Insurance §27-406 (false applications)
- Md. Code, Insurance §27-407 (soliciting accident victims)
- Md. Code, Insurance §27-407.1 (staged accidents)
- Md. Code, Insurance §27-407.2 (contractor deductible rebates)
- Md. Code, Insurance §27-408 (penalties)
- Md. Code, Insurance §27-802 (duty to report; immunity)
- Md. Code, Labor & Employment §9-1106 (workers’ compensation fraud)
- Md. Code, Criminal Law §7-104 (theft penalties)
- 2024 Md. Laws Ch. 826 (HB 36)
- Maryland Insurance Administration, Insurance Fraud and Producer Enforcement Division
- Maryland Insurance Administration, Annual Report, Fiscal Year 2025
- Maryland Insurance Administration, Consumer Guide to Insurance Fraud
- Coalition Against Insurance Fraud, Fraud Stats
Updated September 25, 2026. This article provides general information about Maryland law, not legal advice for your situation.