Automobile insurance fraud is something that everyone should be aware of, even if they have never committed it themselves. Understanding what auto insurance fraud looks like and how it happens can prevent you from falling victim to it in the future. Most importantly, having some basic knowledge about automobile insurance frauds would prevent you from making any bad legal decisions regarding your car.
Key Takeaway
Today’s automobile insurance frauds mean increasing your risk of personal harm and more significant financial loss. When it comes to vehicle insurance, one of the most popular types of fraud involves claiming nonexistent injuries. It may seem easy to get some extra money by claiming false damages but in the end, it will cost you more than you would imagine. It isn’t worth it!
What Is Automobile Insurance Fraud?
Automobile insurance fraud is any deceitful or criminal act perpetrated to obtain money, goods, services, or any other benefit using auto insurance. A typical automobile insurance fraud can take many forms. This kind of fraud can be done by the insurance company, professionals as well as the customer of the insurance. In regard to the extent of the false claims and the amount of money paid by the insurance company, automobile insurance frauds can be divided into two categories: hard and soft frauds. whereas hard frauds may include staging an accident to get the insurance money, soft frauds mean fabricating information or filing false claims on the damages and repair.
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Types of Car Insurance Frauds Explained
There are mainly five types of car insurance fraud most of which include some form of filing false claims to get benefits from the insurance company.
The first type of car insurance fraud involves making false claims for damage to your vehicle and personal injuries. This type of car insurance fraud is committed by filing a claim for damages not sustained in an accident, such as false claims for:
The first type of car insurance fraud involves making false claims for damage to your vehicle and personal injuries. This type of car insurance fraud is committed by filing a claim for damages not sustained in an accident, such as false claims for:
1. Damage to the vehicle
2. Personal Injuries
3. Stolen Car
4. Misinformation During Application
5. Staging a car wreck
1. Damage to the vehicle
Falsely claiming dents and scratches so that they can get reimbursed for the repairs.
2. Personal injuries
Falsely claiming health injuries to get paid for the medical bill.
3. Stolen car
Filing a stolen car to get reimbursed while the car was not stolen at all.
4. Misinformation during application
This type of fraud involves under-reporting income to reduce premiums paid on auto insurance policies.
5. Staging a car wreck
If you stage an accident or damage the car intentionally, that comes under auto insurance fraud for which the company can file criminal charges against you.
While these claims seem simple on paper, they can get complicated fast if law enforcement becomes involved. There have been many cases where staged accidents resulted in serious injuries or even death because people did not think through their actions before carrying them out. If someone is found guilty of staging an accident, they will face harsh fines and possibly jail time depending on what happened during the incident and how much money was stolen.
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What Are The Consequences Of Automobile Insurance Fraud?
There are several types of car insurance fraud that can be committed with car insurance. The most basic was filing a claim for damages when there were none (for example, you hit a tree branch on your windshield and filed a claim saying it was caused by accident). While not all insurers require inspections, if yours does, you could have your policy canceled or face fraud charges after claiming your vehicle was damaged without seeking repairs.
If you’re looking for cheaper auto insurance rates or want to ensure that you won’t get in trouble later down the road, make sure your claims aren’t fraudulent. If they are found to be false, you will pay higher premiums and have a much more difficult time filing future lawsuits, even if they are legitimate.
3 Examples of Car Insurance Fraud
Here are some famous examples of how people commit car insurance fraud—and why should not even imagine committing one like this.
1. Exaggerating or fabricating claims
2. Staging accidents
3. Filing false claims
1. Exaggerating or fabricating claims
For starters, one of the most common ways people try to commit automobile insurance fraud against their insurers is by exaggerating or fabricating claims. For example, if your fender bender results in an accident report but only a small dent, you might say that it caused thousands of dollars worth of damage so that your insurer will pay for all or part of your repairs (which would otherwise come out-of-pocket). Or maybe you file a false claim saying someone has hit your parked car but did not leave their contact information—even though they had plenty of time and opportunity to do so before driving away.
2. Staging accidents
Another type of automobile insurance fraud involves staging accidents. For instance, it happens when two parties conspire to create a fake collision and then collect fraudulent damages from their respective insurers.
3. Filing false claims
Finally, people cheat their auto insurers by filing false claims—for instance, claiming that they were involved in an accident when they weren’t actually at fault or intentionally damaging their cars and then filing fraudulent property damage claims.
Conclusion
With so much competition online, car insurers are becoming more efficient at screening out fraudulent claims. Fraudsters will have to get smarter to get away with their lies. Various types of car insurance frauds are rising and if you’re planning on filing any claims, make sure you don’t inadvertently commit one of these frauds that insurers might detect as a lie. Do your homework and avoid committing car insurance fraud by accident.
FAQS
How do I avoid auto insurance fraud from the company?
Firstly, ask the insurance Agent for ID Proof. You should never pay in cash. You may ensure that you read the policy documents yourself in detail.
What is the most common type of insurance fraud?
The most common type of insurance fraud is application fraud which happens when you knowingly and intentionally provide false information on an insurance application.
How Can Automobile Insurance Frauds Be Prevented?
You should only provide identity proof to reliable people to prevent identity theft and insurance fraud cases from taking place. Agents might take your ID proofs and misuse them.
What to do if you get scammed by Automobile insurance frauds?
Preferably, skip the agents and intermediaries. Verify before purchasing. Wisely choose your mode of payment. Most importantly, always ask for the receipt. Report suspected scams to the National Insurance Crime Bureau (NICB).
What is the penalty for car insurance fraud?
Insurance fraud occurs when people deceive an insurance company in order to collect money to which they are not entitled. Soft fraud is usually considered a misdemeanor, punishable by fines, jail time of up to one year, community service, and probation. Hard fraud is almost considered a felony, punishable by strict penalties including the possibility of incarceration in state prison for a number of years.
Phew! Thank goodness you warned us to keep ourselves away from making any inaccurate insurance claims because it could cause us to serve some time behind bars. I’ve been searching for a suitable policy for my brand new car which I just bought last month. I’ll surely keep this reminder in mind when confirming a deal later.
This is what we are here for. We don’t want anyone to get trapped in any kind of automobile insurance fraud and the best way is to guide them. We are happy that you find our article informative. Do share with your friends, and family so that they can also get aware of such fraud.
very useful inform for us thanks for informing about this trapes and its very nice you share it with us and helping many of the people out there, as insurance is the main thing in car and if someone is trapped in that than its not the good thing. Thanks for sharing this information with us.
Hey Alex,
Always happy to help. Yes, you are right – insurance is essential, and everyone should get one from a good insurance company to avail of its benefits.