Anyone know about the California Fraud Assessment Fee for insurance?

I came across something called the California Fraud Assessment Fee (Insurance Code § 1872.8), and I’m wondering how it works. Does anyone know what this fee is for and how it’s used?

Yeah, I’ve heard about it! Basically, insurers in California pay this fee to help fund investigations into car insurance fraud and auto theft. They charge up to $1 per insured vehicle.

Rin said:
Yeah, I’ve heard about it! Basically, insurers in California pay this fee to help fund investigations into car insurance fraud and auto theft. They charge up to $1 per insured vehicle.

So the insurance companies have to pay $1 for every vehicle they insure? What does that money go towards?

@Zeek
Yep, up to $1. Most of it gets split up between investigations for insurance fraud and economic auto theft. The money goes to the Fraud Division, local district attorneys, and even the California Highway Patrol for their investigations.

Fun fact: 51% of that fee goes to district attorneys for investigating fraud. If they don’t submit an application detailing how they’ll use the funds, they can lose the money.

Zinn said:
Fun fact: 51% of that fee goes to district attorneys for investigating fraud. If they don’t submit an application detailing how they’ll use the funds, they can lose the money.

Interesting. So does that mean district attorneys have to prove they’re actually using the money for fraud investigations?

@Reagan
Exactly! They have to file annual reports with info like how many investigations and arrests were made. The commissioner audits them every few years to make sure they’re using the funds properly.

I read that 5 cents from that $1 goes to extra fraud investigations. It’s crazy how detailed they get with splitting up the funds.

Tan said:
I read that 5 cents from that $1 goes to extra fraud investigations. It’s crazy how detailed they get with splitting up the funds.

Yeah, and even the California Highway Patrol has to report how they spend their share! It’s mostly for stopping economic auto theft.

What’s ‘economic automobile theft’? Is it just stealing cars for money?

Noel said:
What’s ‘economic automobile theft’? Is it just stealing cars for money?

Pretty much! It’s when someone steals a car to make money, like selling the parts or filing a fake insurance claim. It also includes stuff like switching VIN numbers to sell stolen cars.

Good to know about all this! It sounds like a lot of the money is really focused on stopping fraud and theft. I wonder if they make a dent in the problem with all these investigations.

dominic said:
Good to know about all this! It sounds like a lot of the money is really focused on stopping fraud and theft. I wonder if they make a dent in the problem with all these investigations.

I hope so! From what I’ve read, they’re supposed to go after every report of fraud they get. But yeah, whether it makes a big difference is hard to tell.