Car insurance scams cost the insurance industry tens of billions of dollars annually and usually take the form of insurance fraud. Insurance fraud occurs when individuals and/or drivers create automobile related circumstances that aren’t genuine, inaccurate or pre-conceived for financial motives. In doing so the insured attempts to manipulate the legal system and insurance policy for fraudulent personal gain.
There are several instances when insurance scams can favor the scammer and are more likely to happen. These situations require certain situations for the scammer to pull it of well. The following list includes some of those requirements:
• An ability to not-verify actual circumstances i.e. accident with no witnesses
• The opportunity to engage in accident ‘accidentally’
• Collision points that can incur the most fabricated damage
• Medical records that don’t match the insured’s injuries or seem overly high.
• Use of collaborators whether they be ‘victims’, repair facilities or medical assessment
• An innocent victim not involved in the scam.
Motives for insurance fraud:
Insurance fraud may take place for a number of reasons loosely linked to an un-ethical and illegal individual will or desire. In some cases a conviction that insurance fraud is somehow the right thing to do may delude the insurance scammer into thinking what they are doing is getting back what they are owed.
For example, insured individual X may think he or she could have repaired his or her car with all the years of dutiful insurance payments made to the insurance company. So in an attempt to reclaim money paid out or simply avoid paying for the repair, individual X conjures up an accident to get fixed via insurance. This is a case of insurance fraud in which the motive is simply not in accordance with existing insurance laws and the criminal act is a staged accident and insurance claim under false pretenses.
Insurance fraud watchdogs and information awareness groups:
Insurance fraud is not limited to individuals looking for a new automobile fix. Scams can potentially include sophisticated organized crime groups, mechanics, and medical facilities. There are several organizations that actively take part in catching, stopping and building awareness of insurance scams. A few of those organizations are as follows.
• Coalition against Insurance Fraud
• National Insurance Crime Bureau
• International Association of Insurance Fraud Agencies, Inc.
• National Associations of Insurance Commissioners
• Investigative Services Firms across the nation.
Tips on preventing insurance fraud:
Anyone can be a potential unknowing participant in an insurance scam. For this reason it is important to be aware of the practice and stay aware of potential situations in which an insurance scam could take place. The following tips may assist drivers and/or potential victims in being prepared and avoiding insurance scams.
• If a pedestrian try and stay away from moving vehicles.
• If a driver, slow down near ‘unaware’ pedestrians.
• Keep an eye out for drivers who ‘fall back’ too close, accelerate and decelerate often.
• Install vehicle cams on the front and rear of the automobile
• Be aware of driving situations that can’t be documented
• Take photos of any accidents and if possible obtain witnesses
Auto insurance fraud is illegal in all states except Virginia, which nevertheless investigates fraudulent insurance claims. In any case, auto insurance scams are generally not a good idea, may be prosecuted and can cause imprisonment and/or fine. It is probable insurance fraud will never be eliminated but it can be reduced.. This article has illustrated what insurance scams can involve, how to be more aware of the scams and ways to avoid being part of an auto insurance scam.
Sources:
1. http://www.iii.org/media/facts/statsbyissue/fraud/
2. http://www.knowautoinsurance.com/autoinsurance-articles/auto-insurance-fraud-penalty.htm