When tough economic times prevail, you can always count on someone trying to make a fast buck at someone else’s expense. When it comes to insurance companies, professional investigators will tell you that the scams are highly organized, costing over $14 billion every year.
As far as car insurance premiums go, this adds another $200 to $300 to the cost of insuring a single car for twelve months. These frauds are not just focused on unwary insurance companies, however. Many consumers can attest to “fly-by-night” insurance providers that never existed, a fact one hopes to find out before a claim is ever filed.
The criminal element in our society is known for elaborate schemes to defraud insurance companies, but occasionally ordinary citizens resort to these escapades without much success. A recent high-profile case in New York City is evidence that some among us will go to untold lengths for a quick gain. Eight individuals in the Bronx staged a three-car accident at one offbeat intersection. There were no eyewitnesses present, and then each perpetrator filed for medical reimbursements that for the group amounted to over $40,000.
Police officials immediately objected since the damage to the cars was minimal, not near enough to warrant such medical injuries. The fraudsters also got a bit greedy by having two of the cars involved in more than one accident at the same location. The truth came out when a surveillance camera was discovered on the scene. The video revealed that the cars kept circling the block waiting for pedestrians to disburse, and then the eight crooks were caught in the act.
Such antics can be humorous when they appear on nightly news programs, but deliberate car insurance scams are big business in America and on the rise. Some studies estimate that nearly one third of all auto claims have some degree of fraud connected with them, while ten percent are said to be outright fraudulent from the start.
Although the above incident may sound like an episode from “The Three Stooges”, it was more than likely staged by criminals far from the scene. This type of staged event usually involves three levels.
The first and most lucrative is the higher ups, the lawyers and doctors that falsify records and file fraudulent health and car insurance claims. False whiplash injuries are the general rule due to the difficulty of diagnosis and the need to rely on the declarations of the injured, which are easy to fake. The second level secures the cars and the individuals for the event, typically the downtrodden. The last level, who will follow orders and keep quiet if caught.
Staged events, primarily deliberate rear end collisions, however, only account for ten percent of annual fraud costs. The bulk of the criminal activity relates to inflating repair and medical bills, falsifying injuries, and adding injured parties that were never at the scene of the accident.
Nicknamed “jump-ins” for obvious reasons, these opportunists hope to gain quickly and escape detection from insurance investigators. Some do, and some do not, but the manpower and time spent add more layers of cost that must eventually be recovered from premiums charged to the consumers at large.
One of the fastest growing sectors of unscrupulous activity is called “owner give-up”. As the name implies, a car owner arranges for his vehicle to be torched or dumped in a river or lake, while informing the police that his car has been stolen. The funds he receives do not necessarily fund a new joyride since the new found monies usually go to paying down the remaining debt on his automobile.
Lastly, there is the “softer” side of fraud that occurs after the accident. Agreeable repair shops and medical professionals willingly pad bills in the hopes that insurance companies will be none the wiser. The Insurance Research Council (IRC) estimates that these practices contribute another $7 billion to annual damage and injury claims.
Sadly, a great deal of fraud is also perpetrated directly against the consumer that searches for a cheap insurance quote. Many scams exist where phony insurance companies use the Internet to dupe consumers for premiums that never fund an insurance contract, nor will ever pay on a claim.
If you are looking for the cheapest car insurance, be sure to deal with a reputable quote service that deals only with reputable insurance firms. Be alert and suspicious. Do your due diligence each step in the process, and be sure to check the fine print in your chosen policy.
Unfortunately, car insurance fraud is on the rise. It is highly organized and cannot be fully eliminated. When it comes to a consumer directed scam, you are your first and last line of defense. Stay alert!
“Guest contribution provided by Cheap Insurance 1-2-3”