Being involved in a car accident is already a poor situation because of the damaged vehicle, the potential injuries, and the auto insurance claim. What’s worse is that, in a small number of cases, the collision was deliberately planned and orchestrated, turning the innocent drivers into pawns in an auto insurance fraud.
The second most costly financial crime in the United States is tax evasion, which includes insurance scams. And it happens much more frequently than you may imagine. According to experts, more than 20% of bodily injury claims and 10% of motor damage claims resulting from traffic accidents are false.
Car insurance scams prey on law-abiding drivers by ruining driving records, causing legal issues, and raising premiums. Due to the after-the-fact reporting of car accidents, insurance companies also wind up paying out millions of dollars each year to settle claims that aren’t true but simple to float. Car insurance firms are too alluring a cash source for both large criminal organizations and lone criminals to pass over. And everyone’s insurance policies end up costing an additional $200 to $300 per year as a result.
Here are the top five auto insurance frauds, along with some helpful tips on how to try to avoid them.
5: The Forced Rear-ending
The most typical (and risky) insurance claim is the staged rear-ending, often known as a “crash for cash” or “swoop and squat.” The process: In order to trick the victim, the con artist will either swoop in front of them, slow down or stop in heavy traffic, at an intersection or on-ramp, or slow down or stop in a busy area. Rear-endings are nearly always viewed as the responsibility of the motorist in the back, who in this instance would be the con artist’s intended victim. The insurance firm might make a tidy profit by adding: Despite the collision’s very low speed, the con artist can additionally allege to be experiencing neck or back pain. This permits both an injury claim and a collision claim.
Follow other vehicles at a safe distance that will give you plenty of time to stop abruptly in order to avoid this situation. In order to foresee the need to slow down, it’s also a good idea to be aware of the traffic ahead of the automobile in front of you.
4: The Bad Samaritan
Consider yourself in a car accident and you are waiting for a tow truck and the police to arrive as you are standing by the side of the road. The accident can’t be avoided, however in this case the swindle happens afterwards. In order to persuade you to seek the services of a specific medical facility for your injuries, or to hire a specific body shop or lawyer, a con artist may approach you — or even phone you, thanks to a tip from a dishonest tow truck driver or mechanic. This mechanic and lawyer are probably unknown to you, and for good reason—they’re con artists. All of this is a ploy to obtain your information so they can file fictitious or bogus insurance claims from which they would profit handsomely, if not entirely.
Don’t divulge your information to any more parties, and make sure you handle all essential business with both your insurance company and the insurance company of the other driver.
3. A fabricated injury claim
This can can place in all kinds of collisions, not just rear-end collisions. Let’s say you and the other motorist have a little collision, and the other driver immediately claims having back pain, “whiplash,” or other injuries. If the driver needs hospitalization, he will submit an insurance claim to your insurance provider, even if it is false, to cover the cost. Scammers may work with and pay off unscrupulous doctors, chiropractors, and physical therapists to corroborate their injury reports in order to receive compensation from insurance companies because whiplash and phantom pain are particularly difficult to show on an X-ray.
If the other motorist acts and seems normal following an accident, but when the police arrive, they start whining and wincing, it may be a sign that this fraud is in progress. How to prevent being duped: Even if it’s a minor mishap, report it to the police. It will be much less probable that an insurance provider will think the other driver sustained serious injuries if the official record only shows a scratch or minor damage.
2: The Phantom Victim
When people who weren’t even in the automobile file a personal injury claim with your insurance carrier, you know it was a horrible car accident. In reality, this fraud is called “the phantom victim.” The con artist will make an effort to submit claims for other passengers in the automobile, alleging pain or injury, even if no one else was present. This may be the result of a manufactured accident or a money-making scheme that follows. (Scammers can try this especially easily with online claim submissions.)
You can’t fully stop this fraud unless you follow the other motorist around for weeks, but it can be thwarted. Count the number of passengers in the other car (if any) and snap pictures of the other car, its occupants, and the overall scene when gathering information following an accident, such as the other driver’s license number and contact information. Inform the state insurance fraud bureau of any unusual circumstances.
1: The Staged Accident
A con artist can put you and your insurance policy in peril in more ways than just by rear-ending you. In a scenario known as “the drive down,” a seemingly pleasant stranger who has the “right of way” waves you into traffic before ramming into the side of your vehicle and attempting to merge into traffic at the same time. He’ll then say he didn’t authorize you, which makes you responsible. Two automobiles fighting for a parking spot might result in a similar scam, which leads to the same outcome — an accident and an insurance claim. Another sort of staged collision is a sideswipe, in which a thief may purposely ram your vehicle if you veer into the outside lane when turning through the inside lane of a two-lane turn zone at a junction.
The best method to stay out of difficulties of this kind is to be aware and watchful, always staying in your lane and observing “right of way” rules.