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Car Insurance Scams Including Fraud, Arson and Staged Accidents

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Car Insurance Scams

An alarming sign that U.S. citizens are stressed-out by the economy is the increase in auto insurance scams. Many feel that desperate acts such as these are the only solutions to their debt and financial woes. Some people rationalize that when they fraudulently cheat car insurance companies out of a few hundred dollars, it is a victimless crime. Others ruthlessly make a full-time profession out of arson, staged accidents and other more violent crimes because it is so profitable.

Hard Forms of Auto Insurance Scams
Instead of shopping for a car with small monthly payments and buying low cost car insurance, that Infiniti G37 he bought was a little hard to swing last year: now he lost his job and can't make payments. Solution: take the car out in the desert and burn it to collect the insurance. According to the U.S. Fire Administration in 2007, 20,500 cars were intentionally burned in the U.S. It's getting worse: New York's burned car claims shot up 18 percent in the past 12 months, according to Dennis Shulkins with State Farm Insurance's special investigations unit.

Another popular method of disposing of a vehicle now too expensive to make payments on is to ditch it in a lake or other body of water. According the Gulf Coast News, shortly before Hurricane Gustav hit, dozens of expensive cars were parked at the ocean's shore. Chop shops and a well-organized underground of body shops find disposing of vehicles and selling their parts a steady business.

Insurance Scam, Staged Accident

A dangerous and horrifying extreme to which criminals go to earn a dollar is in "staged accidents." Causing an accident and faking injuries to collect from the intended victim's insurance company is estimated to yield $4.8 to $6.8 billion a year in falsified medical and repair shop charges. Some involve elaborate networks of people in on the scam including: drivers, helpers, insurance brokers, physicians, and attorneys. Many perpetrators of these crimes use a single car and several assistants.

The intentional break-slam or panic stop directly in front of an unsuspecting and distracted driver is a simple and effective scam. After the criminal maneuvers his vehicle in front of the victim's car, his helper watches for the right moment when the unsuspecting target driver becomes distracted by answering his cell phone or gazing over at his CD player. At that moment, the helper signals the driver to slam on the brakes, not giving the victim time to swerve or brake. A familiar scenario ensues when all occupants in the first car are transported to the hospital with alleged whiplash injuries.

Insurance Scams, Arson

A variation of the panic stop is the "swoop and squat" in which three vehicles are involved: Perpetrator Car A cuts off Perpetrator Car B which panic stops in front of Victim car C. Acting when the opportunity arises, perpetrators of the "side-swipe" do their damage in the outside lane of a double left-hand turn lane when the victim accidentally drifts wide into second lane where the perpetrator accelerates and sideswipes the victim. The outcomes of staged accidents are unpredictable and occasionally much worse than the perpetrators intended, with fatalities of the victims and the criminals as well.

Soft Forms of Auto Insurance Scams
The most common form of auto insurance scam is called "soft fraud." These involve people filing more than one claim for the same injury or for unrelated injuries; Filing claims for treatments which were not rendered. A dishonest body shop can overcharge and split the profits. "Rate evasion" is a petty form of scam in which a driver applies for insurance claiming residence in a region with a lower rate than the true place of residence.

Apprehension
Many of these crimes are hard to prosecute due to the fact that the perpetrator has opportunistically executed the crime in a way to make the victim look like the guilty party. If you are involved in any accident, immediately begin documenting your observations of all of the passengers, victims and circumstances. Immediately call 911 to request that the police take an accident report. Document what people say, record descriptions and numbers of occupants. Always carry a disposable camera for these types of situations. Immediately inform your insurer.

Prevention
In today's desperate society, it pays to be ever-vigilant and to drive defensively. Don't tailgate and try to recognize suspicious situations. Stay away from slow-moving vehicles with multiple occupants. The impact of car insurance scams on the average policyholder amounts to an additional $300 per year in car insurance premiums, which reinforces the reason why you should score as many discounts for being a safe driver as you can. If you find yourself tempted to solve a debt problem by concocting a car insurance scam, don't do it. You might get away with it, but if you don't, the legal system hands out very harsh punishment for those it apprehends.

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