When you find yourself in a car accident, it can be devastating in all aspects. But wrecked vehicles and injuries aside, there is the auto insurance claim to consider, too. In some cases, the accident could be a planned and coordinated effort, where innocent drivers can quickly become pawns in an auto insurance scam.
Auto insurance scams are far more common than many tend to believe. Insurance scams are the second-highest financial crime in the US, and according to experts, more than 20% of injury claims and 10% of auto damage claims are bogus.
What Are Auto Insurance Frauds?
In a nutshell, an auto insurance scam is when someone attempts to trick car insurance companies for financial gain. This could be in the form of staging car accidents or lying about extra damages to a vehicle after an accident. Essentially, auto insurance frauds victimize honest drivers who are law-abiding citizens by creating legal issues, blemished driving records, and higher premiums.
Auto insurance scams affect everyone because losses and claims determine part of what you pay for your auto insurance. The more claims filed in an area, the higher the car insurance premiums would be. In all fairness, insurance companies also pay millions of dollars a year in settling claims that are fake but are so elaborately planned that they come across as genuine accidents.
So, let’s look at some of the most common auto insurance scams, together with how to avoid them.
Staged Rear-Ending
Staged rear-endings are the most common auto insurance claim – and the most dangerous, too. These scams are also called “crash for cash,” and this is how it works: the fraudster will come to a halt or slow down in a busy traffic area, an intersection, or an on-ramp and swoop in front of the victim so the driver crashes into them from behind. In nearly every jurisdiction, this is considered the fault of the rear driver, who, in this case, is the victim of the scam. The con man will also further claim injuries to the body, even though the accident occurred at a low speed. Therefore, it allows for both an injury claim and a collision.
What can you do?
When driving, ensure you don’t follow other vehicles too closely. Allow plenty of space to stop quickly and be well aware of the traffic ahead to anticipate when you need to slow down.
Fake Injury Claim
In this type of scam, the fraudster falsely claims to have faced some kind of bodily harm, regardless of whether the accident itself was real or staged. For example, you get in a fender-bender, and the other driver reports back pain or other injuries. The driver will seek hospitalization and file an insurance claim requesting your insurance company to cover the expenses. Often, whiplash and phantom pain are difficult to display on an X-ray, so scammers can also cooperate with shady doctors or physical therapists to corroborate their injury reports to get a payout from insurance companies.
What can you do?
Generally, when the other driver in an accident appears fine but starts moaning in pain the moment the police show up, it’s most likely that a scam is underway. In this case, you should file a police report even for a minor accident. If the official record only notes scratches or minor damage, it’s less likely that an insurance company will believe that the other driver had any severe injuries.
Staged Accidents
There is a situation known as “the drive down,” where a friendly stranger waves you into traffic and then crashes into your side of the car, merging into traffic as you do. This stranger will then deny that they gave you any permission, leaving you liable. Similarly, another scam can occur when two vehicles vying for parking space end up with the same result – an insurance claim and a collision.
What can you do?
Always be alert when driving and be aware of your surroundings. The importance of staying inside your lane and following road rules (even when there seem to be no other cars on the road) cannot be stressed enough!
The Phantom Victim
The phantom victim scenario is when people who were not even in the vehicle at the time of the accident file for a personal injury claim with your insurance company. Even if there was an actual accident, the victim may claim that there were more people present than there really were. Due to online claim filings, scammers find it easier to file claims for additional passengers in the car, even if no one else was present.
What can you do?
Of course, you can’t prevent this type of scam, but you can thwart it. After an accident, be sure to collect as much information as possible, such as the driver’s license number, contact information, and a count of the number of passengers in the vehicle. Most importantly, take photos of the other vehicle, passengers, and the scene in general. If you notice any suspicious circumstances, report to the state insurance fraud bureau immediately!
Being Approached By Fake Officials or Consultants
Let’s assume that you are standing by the side of the road after you’ve been in a car accident, waiting for the police to arrive. A con artist might approach you and pose as a third-party insurance consultant or official. They will try to convince you to employ the services of a specific health clinic for your injuries or a particular mechanic or lawyer you’ve never even heard of before. It’s all part of an elaborate setup to get your information so they can file for false insurance claims and take a hefty cut!
What can you do?
Make sure to deal only with your and the other driver’s insurance companies. Don’t ever give your information away to any other parties.
Final Thoughts
Remember, auto insurance scams are a serious and dangerous criminal offense. If you believe that you are a victim of fraud, notify your insurance company immediately. Moreover, if you suspect that you have witnessed a scam, contact your state’s Department of Insurance. Do not hesitate to notify fraud; when you report it, you help keep insurance premiums from increasing while protecting yourself and others!
