Washington bill expands insurance fraud to include vehicle repairs and appraisals

A Washington State insurance commissioner-sponsored bill to combat insurance fraud, including for vehicle repairs or appraisals, passed the Senate Tuesday. 

SB 6031 expands insurance fraud to include medical, vehicle or property services not rendered or vehicle or property repairs not made or supplies not provided. 

It also makes insurance fraud a Class B felony in state law. 

The bill passed the Senate 49-0.

The definition would also include the submitting of a statement, estimate, invoice, bid, proposal, proof of loss, or any other document that misrepresents the scope of damages or costs of repairs associated with property insurance. 

It goes on to say insurance fraud could include appraising or umpiring under the appraisal clause of an insurance contract but failing to do so in an impartial manner including in the self-interested manner, such as on a contingency fees basis, or to secure additional appraisal or umpiring opportunities. An appraiser or umpire could also be partial if influenced by an insurer, policyholder, or claimant

The victim of fraud is also expanded to include not just the insurance company but also consumers or beneficiaries. 

The bill also gives the Office of the Insurance Commissioner’s Criminal Investigations Unit (CIU) modern tools to investigate fraud, a press release from the office says. 

“Defining the most serious acts that defraud insurance companies and consumers as the crime of insurance fraud helps us hold the most egregious actors accountable,” Patty Kuderer said in a press release. “This approach shifts CIU’s focus away from simple scams — like crashing a car and then buying a policy — to more complicated schemes, like exploiting loopholes to steal large amounts of money in smaller denominations to avoid prosecution.”

Sponsor of the bill, Sen. John Lovick (D-District 44), told the Senate Committee on Business Trade & Economic Development Committee last month that the bill could help reduce insurance premiums for consumers. 

“As technology driven insurance has advanced, current law has not kept up with these offenses,” Lovick said. “By exploiting gaps in the law, fraudsters harm more than just their victims.” 

The bill would give CIU the tools and staff to stop the advanced crimes, he said. 

Kuderer also said the bill would keep premiums lower and ultimately serve as a consumer protection bill. 

“We do believe this legislation will be a model for other states to follow,” she said. 

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Washington State insurance commissioner-Patty Kuderer testified before the Senate Committee on Business Trade & Economic Development Committee last month. 

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