Car insurance fraud is a crime that is committed when one acts with the intention of creating a situation, where they can make a claim against their or another driver’s insurance company. Car insurance scams cost to the insurance companies billions of dollars each year. Unfortunately, car insurance fraud affects you whether you participate in it or not.
There are few things that make the most common type of car insurance fraud. They are
- To fake that car is stolen: One of the most common types of car insurance fraud occurs when someone simply parks their car somewhere secluded or has someone take their car and hide it, and they report their car as stolen. It takes few months for the insurance company to pay on this claim in this situation. The person who reported their car as stolen, uses the money to pay off their car, if they owe money on it. Once the car is found, it belongs to the insurance company and company cannot force that the person to pay back the money and take back the possession of car. This increases the insurance company expenses, so that to cover the expenses the company may rise the premiums of the policies.
- Shipping a car outside: This type of fraud occurs when someone has a car which has high demand outside. In such situations, the people who want to do scam, they simply ship the car there and sell it, and they report to their car insurance company as it is stolen. In this case they receive money from insurance company as well as from the sale of the car.
The above kind of car insurance frauds are called as hard fraud and they are actions that are committed by the car owner. Here are also some soft frauds, that are made by the scammer to get the benefits of car insurance. Such scams are dangerous to the car insurance holder. They are
T bone: This is done by the criminal. This normally takes place on a desolate street. The criminal car will wait an intersection for a potential victim to drive up. Once the criminal sees a car, they speed up and collide into the victim’s car as it passes through the intersection. Bogus witnesses are on the area so that when the police arrive, they claim that the victim ran a red light or a stop sign.
The wave: On a congested street, the criminal car will “wave” the victim car in, effectively giving them the right-of-way. But when the victim tries to merge into the lane or make a turn, the scammer car will speed up, initiating a collision. When the police arrive, the criminal driver will disclaim any knowledge of the wave and declare the victim to be at-fault.
Side swipe: In a double turn lane, a criminal car will wait until the victim’s car drifts into the far lane. At the moment they will hit the gas, and side swipe the victim’s car.
Paper Accident: Criminals, along with shady participants in an auto body shop, will submit a fake claim for an apparition accident. They will keep the claim under $1000, since car insurance companies will rarely investigate claim for that amount.
The above are the various frauds and scams, which an auto insurance company should be aware of.