California Couple Found Guilty Of Auto Insurance Fraud
In December of 2007, an uninsured teenager backed the family car out of her driveway when she accidentally struck a moving vehicle. Maria Nuno, the teen’s mother, who had auto insurance, later claimed to the insurance company that she had actually been the one driving the car when the accident took place. Based on this false information, the insurance company paid out sums based on the claim. Investigators later discovered that Nuno’s story was false, and both Nuno and her husband have been prosecuted by the county.
Both Nuno and her husband pleaded guilty to auto insurance fraud, and the court sentenced them to serve thirty days in the county jail, with two years of probation to follow. They were also ordered to pay restitution in the amount of $2,200, along with a fine of $180.
The National Insurance Crime Bureau estimates that for every insured car, citizens have to pay an additional $200-$300 per year to cover the cost of fraudulent claims. The Insurance Research Council estimated that in 2007, car insurers nationwide made excess payments totaling nearly $6.8 billion as a result of auto fraud. Not only are consumers harmed, but businesses suffer as well. Every business is forced to pay the cost of this fraud, since the added cost means businesses must charge more for goods and services than they might otherwise.
Other ways that auto insurance fraud harms consumers is the increased suspicion among insurance investigators, resulting in greater delay in the claims investigation process. A claim flagged as possibly false can take a much longer time to settle, usually involving requests for medical and police records. This results in greater hassle to the legitimate policy holder, as he waits for medical or auto repair bills to be paid. Even worse, honest policy holders who are the victims of auto theft have at times suffered from being falsely accused of fraud by overly vigilant insurance companies – yet another harmful byproduct of car insurance fraud.
Auto insurance fraud falls into two classes: hard’ or ‘soft.’ Hard fraud includes staging a false event in order to be paid out on the claim, such as refusing to confess a hit-and-run, creating injuries to those not present at the accident, and intentional collisions. Soft fraud involves legitimate claims that are padded to increase the payout, for example, adding separate damage to the claim, colluding with a body shop to increase an estimate, or having a doctor schedule needless medical visits.
Each state has passed special laws and regulations to combat fraud. Fortunately, the law worked to prevent Nuno from succeeding in her false claim; it is unknown, however, how many more escape the reach of the law through auto fraud.