January 15, 2010

Why It’s Good To Be Up-to-date On Information About Auto Insurance Fraud

In these hard economic times, incidents of auto insurance fraud are becoming increasingly frequent. People who are tight for cash go out become involved in a car accident, on purpose. Doing so ultimately leads to filing claims against the at-fault driver, and the criminals getting paid. In order to avoid being a victim of one of these scams, it’s important to know what is going on in the world of insurance fraud. Here are some tips on why all drivers should be up to date on information about auto insurance fraud.

Auto insurance fraud is considered a white-collar crime. These are crimes involve no violence, threats or weapons. Auto insurance criminals instead create staged accidents involving automobiles resulting in false auto insurance claims. Crime rings may have multiple people working together to do this. They create these accidents by abruptly stopping, causing a rear-ending situation, or quickly cutting someone off. These sorts of actions make the accidents appear to be the unsuspecting driver’s fault, meaning the criminals can file and collect on claims. In other scenarios, there are criminals that offer help to unsuspecting drivers at busy intersections. While one member of their team will wave ongoing drivers into traffic, another member waits to drive directly into the driver the other is supposedly helping.

Another type of auto insurance involves policyholders that intentionally cause additional damage to their vehicle after an accident has occurred in order to collect more money from the insurance company. Another type of popular form of auto insurance fraud practiced by criminal policyholders is staged theft. The insured may hire someone to steal their car and set it on fire, or disassemble it in a chop shop. This ensures that if any piece of the car is found the parts will be completely unusable. Stolen cars that are insured usually result in a payment from the insurance company. This payment usually helps to offset replacing the car. Realistically it will not be the exact price paid at the time of sale for the car. Claims entered on stolen vehicles usually pay the blue book value of the automobile. However, the criminal has it in their mind to collect whatever money they can.

When auto insurance companies are forced to pay out on false insurance claims, it hurts all their policyholders. Because money is going out of the company, they have to raise auto insurance quotes, premiums and rates in order to make it up. Listening to local and national news reports and reading driver safety blogs will help you be aware if you become a victim of fraud. Being informed may help not only you, but your insurance company and your fellow policyholders by catching these criminals in the act.