A Breakdown of Auto Insurance Fraud
Insurance fraud can cost insurance companies a lot of money and trouble. In 2012, there were about 143,000 requests made to the Crime Bureau for help in investigating suspicious claims.
About 10% of insurance fraud is perpetrated by organized fraud rings. In contrast, 90% of insurance fraud is comprised of padding up claims as well as adding on damage, injuries, and non-existent passengers to a claim.
One third of all bodily injury claims have fraud involved. In fact, fraud costs insurance companies about $30 billion a year. That’s a big chunk of change!
And the perpetrators are not stupid. They employ many different types of fraud techniques.
So what are some the different types and signs of insurance fraud?
A Few Types of Insurance Fraud
Perpetrators of insurance fraud can use all sorts of different techniques to try and defraud insurance companies.
A paper accident is a type of accident that only exists on paper. A perpetrator may ask a person in auto repair or salvage to assist in creating an accident. In addition, doctors, lawyers, and insurance agents may also get in on the scam.
The fraud known as hit and run occurs when a person tries to claim for existing damage. They may call the police and tell him that the car was damaged by a hit and run driver.
Other people like to inflict deliberate damage on their property and ask the insurance company to pay for it, telling them it was the result of an accident.
In addition, there are some people that would go so far as to fake an accident. And some fake damage to themselves in order to collect on personal injury claims, disability, or worker’s compensation.
Types of Auto Accident Fraud
One of the many types of insurance fraud out there is auto accident fraud. Perpetrators of this type of fraud are not only defrauding insurance companies, but can also cause an innocent motorist’s insurance premium to rise.
The T-bone fraud technique occurs when a perpetrator waits for a victim at an intersection with no impartial witnesses. Then when someone crosses the intersection, he rams them. Once the police arrive, the perpetrator provides fake witnesses who claim the victim ran a red light or a stop sign.
In a sideswipe, the perpetrator frequents highways with multiple left hand turn lanes where he continuously makes left turns. Once a driver in the lane next to him drifts into his lane, he speeds up and rams them. Since the victim drifted into his lane, the victim is seen to be at fault.
The wave fraud can be seen as an act of betrayal. In this type of insurance fraud, the perpetrator waits for a victim who is in a yield lane. He waves to for that victim to merge in front of him and then when the victim does, speeds up and hits him.
A swoop and squat requires a perpetrator’s car accident ring to organize an accident with a victim. They plan and maneuver so that the victim ends up rear ending one of the perpetrators.
Is a Claim Bogus?
Though fraud is a problem for the insurance industry, there are several signs that could point to a bogus claim.
One of the signs that a claim is fraudulent is if the claimant has a lot of debt and financial pressure. This could lead him to try and fraudulently collect on a policy.
Another tip is if the claimant increased or added more insurance onto a policy shortly before an accident. If a person is calm after losing something of value, it could also indicate that he is involved with some sort of fraud.
The use of suspicious hand written repair or replacement receipts or the lack of a police report is also a good sign of fraud.
With all the different kind of fraud scams out there, law abiding citizens have to be careful. Insurance fraud not only affects the insurance companies, but can also affect innocent people as well. So keep on your toes and keep your eyes open!