Auto Insurance-Car Insurance Fraud

To some people, insurance fraud is simply no big deal. They think the only ones who suffer are the insurance companies - and they can afford it. Still others feel when they file a false or inflated claim they're just getting back the money they put in. Nothing could be further from the truth!

The fact is that false claims increase loss expenses, which in turn raise premiums - for everybody. And not just a little bit. The insurance industry estimates that fraud costs more than $18 billion annually. In other words, 10 cents of every property/casualty premium dollar pays for fraud. Insurance fraud is the second largest economic crime in the United States, second only to tax evasion.

Staged auto accidents are the most common type of insurance fraud. Phony auto thefts is another: it's a sad commentary that as high as 60% of vehicles reported stolen are actually "dumped" by their owners. Common, too, is the inflated auto repair shop bill "padded" to cover a high deductible. In more recent years, the "swoop and squat" technique has become prevalent. In this case, two cars work in tandem causing the unsuspecting motorist to collide with one of them. The resulting "accident" usually leads to fraudulent personal injury and property damage claims.
Auto insurance fraud is not limited to, or more prevalent in, any particular part of the country - although increased claims activity can result in areas experiencing tough economic times. And fraud shows no socioeconomic boundaries: court records show doctors, lawyers and other professionals caught defrauding insurance companies along with hardened repeat offenders.
But insurance companies are fighting back. It's their obligation to policyholders, shareholders and the general public to investigate and, when necessary, prosecute. Aggressively attacking fraud sends a clear message that it will not be tolerated - and that could mean fewer fraudulent claims and, as a result, insurance premiums for all.

What do insurance companies look for? Claimants who are suspiciously eager for a quick, even reduced, settlement. All medical bills submitted from the same doctor or medical facility. The claimant lists a P.O. Box or hotel as an address. All transactions are conducted in person, showing a reluctancy to use the phone or mail. Of course, one or more of these indicators does not necessarily mean a claim will be investigated. And the vast majority of claims are filed by honest people who are paid promptly.

What can you do to help fight insurance fraud? Individuals can play a critical role in reducing the incidence of fraud. If you are involved in an accident, or witness one, report it. Your account may be important in determining the legitimacy of the claim. Call your insurance company immediately if you are involved in an accident. Always get a police report, as well as the other driver's name, address, license and vehicle registration number. If your accident is minor and someone gives you the name of a doctor or lawyer who can "make you some money," or a body shop mechanic offers to inflate your damages, don't just walk away - contact the police and your insurance company. When buying a car, buy from a licensed dealer, or obtain references from a private seller. Check the vehicle identification number for alterations or replacement. Be wary of fresh paint jobs, remade keys or the absence of title or registration. And speak up! Spread the word that insurance fraud costs everybody.

Source-USA Today, July 1990


Source: USA Today, July 1990