Insurance Fraud – Laws, Penalties & Defences in Australia

Insurance fraud is a criminal offence in Australia involving the dishonest or deceptive claiming of insurance benefits to which a person is not legally entitled. Whether it’s a staged car accident, exaggerated home damage, fake injury claim, or falsified paperwork, insurance fraud can lead to severe penalties, including imprisonment, fines, and repayment of claims.

Insurance fraud is prosecuted under state and territory criminal codes, and in some cases, under Commonwealth law—particularly where fraud involves postal services, telecommunication, or interstate activity.

This guide explains what insurance fraud includes, how charges are laid, the court process, common legal defences, and how each Australian jurisdiction treats this offence.

What Is Insurance Fraud?

Insurance fraud involves intentionally deceiving an insurer to obtain a financial benefit that would not otherwise be paid.

Common examples include:

• Staging car accidents

• Exaggerating injury or property loss

• Claiming for pre-existing damage

• Falsifying documents or receipts

• Submitting duplicate or false claims

The prosecution must prove:

1. A dishonest or false act was committed

2. There was intent to deceive an insurance provider

3. A benefit was obtained (or an attempt was made)

How Are Insurance Fraud Charges Laid?

Insurers and investigators often detect fraud through:

• Claims that don’t match damage/injury reports

• CCTV or dashcam footage contradicting claims

• Forensic analysis of damaged items or vehicles

• Medical or police report inconsistencies

• Tip-offs or whistleblowers

Insurers may refer suspected cases to:

• State police fraud squads

• ASIC or ACCC (for large-scale or corporate fraud)

• Commonwealth Director of Public Prosecutions (if interstate or digital elements are involved)

Commonwealth Law (applies to postal, digital, or cross-border fraud)

• Legislation: Criminal Code Act 1995 (Cth) – Sections 134.2 & 135.1

• Penalty:

  • Up to 10 years’ imprisonment

  • Applies to fraud involving Commonwealth agencies, cross-state scams, or postal insurance fraud

Court Process for Insurance Fraud Offences

Insurance fraud is typically dealt with in:

• Magistrates’/Local Court – for smaller, less complex claims

• District/County or Supreme Court – for aggravated or commercial frauds

The legal process includes:

1. First appearance – Plea entered

2. Disclosure – Prosecution shares its evidence

3. Plea hearing or trial – Depending on plea

4. Sentencing – Based on the amount, planning, impact, and criminal history

Penalties can include:

• Imprisonment

• Fines

• Restitution (repayment)

• Community correction orders

Available Legal Defences

Defences to insurance fraud include:

• No intent to defraud – You made a genuine mistake or misunderstanding

• The claim was valid – The benefit claimed was legally owed

• Reliance on advice – You followed a broker or insurer’s guidance

• Mental health – Affects capacity to understand actions

• No dishonesty – You disclosed all relevant information in good faith