Don’t fabricate accidents or exaggerate damages to defraud insurance payouts: this is insurance fraud, and anyone helping you testify, assess damage, or repair your vehicle is equally liable.

21. Don’t fabricate accidents or exaggerate damages to defraud insurance payouts: this is insurance fraud, and anyone helping you testify, assess damage, or repair your vehicle is equally liable.

Cost: There is no cost and no time required. All you have to do is simply refrain from committing this act.

In plain terms: Deliberately fabricating an accident or inflating the extent of damage to obtain insurance money is a criminal act of insurance fraud. If the amount involved is relatively large, the offender faces up to five years in prison and a fine ranging from 10,000 to 100,000 yuan. Even seeking outside help does not exempt you from liability: anyone who provides false testimony, damage assessments, or property evaluations to assist in the fraud is treated as an accomplice and prosecuted alongside you. In a case from Xuancheng, Anhui, eight individuals including Wang were sentenced to between two and four years in prison and fined 10,000 yuan each. The judgment in this case was issued on September 26, 2019.

Benefit: Article 198 of the Criminal Law outlines five specific scenarios constituting insurance fraud. (1) The policyholder invents a completely nonexistent insured object. (2) The policyholder, insured, or beneficiary fabricates false causes for an actual accident or exaggerates its impact. (3) An accident that never occurred is falsely reported. (4) The policyholder or insured deliberately causes property damage to trigger a claim. (5) The policyholder or beneficiary intentionally causes the death, injury, or illness of the insured. For relatively large sums, offenders receive up to five years in prison and a fine of 10,000–100,000 yuan; for significantly larger sums or severe circumstances, the sentence rises to 5–10 years with a 20,000–200,000 yuan fine; for especially massive sums or grave consequences, the penalty exceeds ten years, with fines up to 200,000 yuan or confiscation of assets. This same article also holds any third parties who knowingly issue false documentation to facilitate fraud accountable as accomplices. Article 27 of the Insurance Law stipulates that insurers may void contracts and withhold premiums if false claims are filed without any actual incident. Should fraudulent documentation or exaggerated damage claims be submitted, insurers are not obligated to pay for the inflated portion and may demand repayment of any prior payouts. In a notable case, eight individuals were convicted of insurance fraud and fined 10,000 yuan each after a court overturned an earlier ruling that awarded over 70,000 yuan in compensation; the original judgment had been secured through forged vehicle transfer documents. The Anti-Insurance Fraud Measures, issued on July 31, 2024, mandate that both underwriting and claims departments actively monitor risk indicators while developing industry-wide fraud detection platforms and intelligence hubs. These systems are designed to flag suspicious patterns, which are then investigated by professional associations, anti-fraud agencies, and insurers. Cases suspected of criminal intent must be reported to law enforcement, while regulatory authorities are required to strengthen coordination between administrative enforcement and criminal prosecution.

Evidence grade: A

Sources: Standing Committee of the National People's Congress. Criminal Law of the People's Republic of China (Consolidated text as amended by the Eleventh Amendment to the Criminal Law) Article 198. <https://flk.npc.gov.cn/detail?id=ff808181796a636a0179822a19640c92>; Standing Committee of the National People's Congress (revised in 2015). Article 27 of the Insurance Law of the People's Republic of China. <https://flk.npc.gov.cn/detail?id=2c909fdd678bf17901678bf7c4060811>; National Financial Regulatory Administration of China (2024). Notice on the issuance of the "Anti-Insurance Fraud Work Measures". <https://www.gov.cn/gongbao/2024/issue_11586/202409/content_6975080.html>; The Anhui Provincial People’s Procuratorate reprinted the "Legal Daily" (2020-01-13). The case of killing his wife and defrauding her of bail was revealed. <http://www.ah.jcy.gov.cn/jczt/jjslhyqkjc/mtjj/202001/t20200113_2758841.shtml>

Notes: Several seemingly harmless practices actually fall under these five categories. For instance, asking a repair shop to overstate repair costs after a minor accident, attributing pre-existing damage to the incident, staging a collision with a friend, or fabricating an accident entirely. Regarding auto insurance, refer to Section 5, Article 26 for optimal coverage levels. In cases involving intentional harm to insured family members, multiple charges apply, as detailed in Section 8, Article 38. Separate regulations govern medical insurance fraud: unauthorized use of yibao (basic medical insurance) cards or illicitly withdrawing funds from personal medical accounts is also classified as fraud, as noted in Section 5, Article 13.