Auto Insurance Fraud Increases as Economy Worsens
Fraud is a rampant, schematic business that can eventually touch every one of us, particularly in a bad economy. Insurance fraud is a criminal act that occurs when someone devises a scheme to intentionally lie to an insurance agency for the purpose of collecting compensation, knowing that they are not entitled to receive it. Insurers and agents have also been known to commit acts of fraud against consumers and other agents, as well. The act alone is not enough to accuse someone of fraud. There needs to be proof of intent to steal and lie about it, orally or in writing. The proof also needs to be relevant to the claims. Most of the United States has fraud hotlines. These investigators work on uncovering schemes of fraud in any insurance area. There are only nine states that do not have bureaus with multi-line fraud hotlines. They are: Alabama, Illinois, Indiana, Maine, Michigan, Oregon, Vermont, Wisconsin and Wyoming.
All victims of auto insurance fraud should take advantage of any opportunity to present the problem to those in the courtrooms and news mediums about the atrocities and severities of this crime. Auto insurance fraud is known as an “economic crime” costing everyone millions of extra dollars per year because of the need to increase auto insurance rates. Fraud is usually stemmed from greed and will often lead to violent crimes involving murder, and personal/property injury. Auto insurance fraud is more than likely stemmed from need. It is like any other crime in that it will impose other costs as well.
Spiral of estimated financial costs:
-Nearly $80 billion for fraudulent claims are made each year in the U.S. in the combined categories of insurance.
-Higher insurance premiums and auto insurance rates are attributed to insurance fraud when the companies have to pass their costs onto their policyholders.
-Businesses pass the cost of their rising insurance costs to their customers by increasing the prices for their services and sales items.
-The corporations spend money on their investigational and prevention techniques to undercover fraud.
Additional costs include illness, disrupted lives and families, humiliation and depression, loss of jobs, and ruined credit/bankruptcy.
Then it starts all over again.
From the other side of the fence, insurance fraud is visible in many forms, from stealing money directly from the policyholders to policyholders stealing money from other policyholders. Some examples include:
-Offering phony coverage
-Offering fraudulent/phony products
In a bad economy, auto insurance can be just as adversely impacted as the rest of the industry when people simply cannot afford to insure their vehicles. Yet, people generally need to use transportation to get to and from the job, if fortunate enough to have a job. People will usually make the choice of paying for the vehicle that they can no longer afford to insure.