Auto Insurance
American Auto Insurance Fraud
Currently, auto insurance fraud is one of the biggest fraud problems that American insurance companies are facing. It is rapidly on the rise and insurance companies and policy holders are scrambling to keep control of the rising costs as a result.
One of the more popular insurance fraud scams deals with staging. The most commonly staged event is an auto accident. In these cases, a person stages the accident to take place so they can file a claim. The most common one today is called a swoop and squat and it usually involves three vehicles. Two of these vehicles are driven by the criminals and a third is driven by an unwilling victim. The driver of the ‘squat’ vehicle pulls in front of the unwilling victim, and the person driving the ‘swoop’ vehicle pulls ahead of the ‘squat’ vehicle, and cuts them off. This causes the ‘squat’ driver to slam on their breaks, and the unwilling victim will rear end them. The ‘swoop’ driver takes off quickly, leaving the unwilling victim behind to likely take the blame (and all the costs of the damages, via their insurance).
Another common type of auto insurance fraud staging is called a side swipe. These happen at busy intersections with more than one left hand lane. The criminal gets in the outer left turn lane. When the unwilling victim drifts into the outer turn lane the criminal deliberately side swipes him.
Another commonly used tactic of staging is called a panic stop. The criminal drives a late model car with several passengers. He will then pull in front of an unwilling victim and have one of his passengers look out the back window to look for any signs of distraction (maybe a person on a cell phone, or playing with their radio). Once the victim’s eyes are off the road for a split second, the criminal will slam on his brakes, causing the unwilling victim to rear end him. In these cases, usually all the passengers will claim injuries, and the victim is caught with all the damages.
American Insurance Fraud and Your Premiums
Did you know that automobile insurance fraud adds $200 to $300 a year to your insurance premium? Basically, when American insurance fraud takes place, the overall cost is felt by the insurance companies. To compensate, they are forced to up your rates and premiums. Your premiums aren’t the only thing that will increase.
You may be wondering what types of events would be considered insurance fraud. There are several different types, falling under the categories of ‘hard’ and ‘soft’ fraud. Hard fraud is typically defined by things that are staged, for instance, a staged accident (deliberately causing someone to rear end you), lying about physical injury from an accident, etc. These types of fraud are especially dangerous because the unwilling participants in your staging could be hurt or killed. Their insurance rates will go up and may even end up having to pay out of pocket for damages if their insurance does not cover the damage.
Soft fraud is less risky and dangerous, but still rises the cost of insurance. In the case of soft fraud, policy holders pad claims by adding damage to a current claim, work with body shops and repair shops to increase estimates for financial gain, and conspire with medical professionals to add unnecessary medical treatment for financial gain.
Most insurance companies have special investigative units (SIUs) to investigate insurance fraud and these work in conjunction with state-run facilities to fight the ever-growing fraud in the industry. Even so, it still happens very often. Likely if you file a claim, it will be investigated by these SIUs. This adds more time and hassle to your claim. American insurance fraud truly affects everyone negatively.