December 21st, 2015
Any time large sums of money are involved, there’s a chance people will stretch the truth. According to National Insurance Crime Bureau, 10 percent or more of property/casualty insurance claims are fraudulent.
These problems are much more widespread than consumers think, even though these fraudulent claims are affecting how auto insurance compares, resulting in billions of dollars in inflated premiums and other expenses.
Certainly the most frightening, and possibly dangerous form of insurance scam is the staged accident. The Coalition Against Insurance Fraud has reported these commonly staged accident scenarios you should be aware of:
Swoop and squat: A vehicle cuts in front of you and slams on the brakes, willfully causing a rear-end collision. Often there are fraudulent passengers in the vehicle, feigning injury.
Drive down: A driver slows down and waves you in on a merge. Then the vehicle crashes into the back of your car and denies waving you in. This is common in parking lots as well as on the road.
Side Swipe: This usually happens at major intersections with dual left turn lanes. If you drift into the other turn lane, opportunists could take this opportunity to cause a collision and blame it on you.
Shady Helpers: Strangers who approach you at a crash site, or connect with you soon after the incident and pressure you into specific medical care, collision repair or legal advice may have sinister intentions. These are usually signs of fraudulent care and bogus insurance claims.
The Coalition Against Insurance Fraud goes on to recommend the following ways to fight back against staged accidents:
- Try not to tailgate, however tempting it may be as it could unwittingly make you a target.
- Call the police to the scene of any accident, and obtain a police report with the officer's name, even if there's only minor damage. This makes it harder for criminals to intentionally damage a car after the fact to try to collect a larger claim.
- Use a disposable camera or camera phone to document any accident damage and the number of passengers in other vehicles, and note how the passengers behave before and after police are on the scene.
- Record the details of the accident, including names, addresses, license plate and driver's license numbers, witnesses and anything else that may be important.
- Report the accident to your insurance company as quickly as possible, even if you aren't at fault.
Agent fraud is a scam that you probably have the most control in preventing. There are many cases in which an unscrupulous agent or a scam artist posing as a legitimate agent takes your premium without ever instating a policy. Another form of agent fraud that is more subtle is known as “sliding” by padding a policyholder’s premium with unwanted additional coverage to obtain a higher rate of commission.
The best way to fight agent scams is by sticking to reputable agents with well regarded providers. Obtaining multiple quotes to see how rates of auto insurance compare is a good idea for many reasons, but in this case, any attempts at ‘sliding’ can be quickly rooted out.
Today there are many ways to obtain roadside assistance. In addition to AAA many insurance providers, car dealers and even credit card companies can provide customers with this added benefit. But in this lies opportunity for scams. Being broken down on the side of the road is an obvious state of helplessness, making easy pickings for a predatory tow truck driver looking for a quick buck. Authorities call them “bandits.” Always verify that a tow driver is one you requested, and read the fine print on a contract before signing it. Make absolutely sure you know where your car is being towed, and that you are not being charged for fraudulent fees or storage charges.
Deployed airbags save thousands of lives yearly, making air bag replacement one of the most frequently needed repair paid for by insurers. While most mechanics are reputable and upfront, there are some that will replace important safety features such as air bags with cheap counterfeits and charging your provider for quality air bags you are not receiving. Unfortunately, this could be a scam that you aren’t aware of until it’s too late, and the cost could be deadly. Fraudulent mechanics can be easily avoided by sticking with the reputable shops recommended by your insurance provider.
Beware of strangers approaching you at a gas station or parking lot offering to replace your windshield for free. In exchange, this stranger only needs your insurance information. Sound legit? Well, it’s not. And in most cases, they end up replacing your quality windshield for one of a lower quality. Access to your insurance policy is used to file expensive and false claims. Tons of time and effort are spent clearing up these messy claims as your premiums climb and your reputation with your insurer plummets. The easiest way to avoid this headache is to “just say no.”
The Insurance Information Institute estimates that fraudulent information from policyholders cost the industry 16 billion a year. By ‘fudging’ or omitting information from policies to obtain cheaper rates, policyholders oftentimes report false addresses to take advantage of lower premium areas. While it seems this type of fraud doesn’t affect you directly, those costs are reflected in how your rates of auto insurance compare to other areas less likely to be targeted for fraud. Discouraging neighbors, friends and family from engaging in what may seem at times to be a victimless crime, will help them avoid federal fraud charges and possible jail time. Not to mention, keeping premiums lower for honest and law abiding policyholders.