Insurance fraud is one of the most common white-collar crimes around, which cause losses in the billions of dollars annually. As much as we think that we won’t fall prey to it, it can come in the most deceptive of ways.
Most policyholders assume that asking for a quote for car insurance on Youi is overly complicated and intimidating, which gives scammers the opportunity to prey on people’s ignorance and carelessness. Regardless of whether they exaggerate the truth or lie upfront, scam artists can con insurance companies and innocent owners thousands of dollars.
Fortunately for you, we’ve put together a list of the most common car insurance frauds and how to protect yourself from them.
Types Of Car Insurance Fraud
First, let’s start with common types of auto fraud you should be aware of. This can happen at any time, be it from getting into an accident or purchasing or selling your vehicle.
Soft Insurance Fraud
Soft insurance frauds include exaggerating damages to get extra claims or coverage. This is commonly done when a driver wants to claim insurance for an accident, and they include damages in the claim that was already there before the said accident.
Another form of soft insurance fraud includes providing false information in order to get lower premiums or to increase the driver’s chance of getting his or her application approved. For instance, a driver could try to hide documents that show that he is a high-risk driver.
Hard Insurance Fraud
Hard insurance fraud, as its name suggests, is a form of fraud that is more serious. It is a deliberate and planned act to scam insurance companies of their money. Hard insurance is easier to spot and commonly happens via staged accidents, injury, arson, or theft.
An example of hard insurance fraus includes a driver forcing an accident by slamming on brakes in order to get the driver behind to slam into him. While it can be argued that hard and soft insurance fraud does not hurt anybody, it could sabotage an insurance company and in turn affect the employees of the company.
Common Car Insurance Schemes
It’s hard to distinguish between soft or hard insurance when you’re on the road or speaking to an agent. Here are some of the main forms of insurance fraud.
Agent Fraud
The minute you purchase your first vehicle, you become prone to scams. Anybody can be vulnerable to agent frauds, as your relationship with him is built on trust, and that trust can be easily exploited.
Agents who scam commonly practice ‘sliding’, where they add in extra coverages you don’t need into your policy and make you pay more money. In worst cases, agents may break their promise to set up an insurance policy for you and simply run with your money. Such scammers don’t just look to scam your money, but also your social security numbers or birthdays to create credit card accounts under your name.
First-time buyers are especially prone to such scams. Furthermore, certain unethical agents may go one step further to target people with disabilities, women, or others that they assume will avoid confrontation.
To avoid agent fraud, we recommend looking through an agent carefully before signing a contract. Don’t let anyone rush or force you into something you’re not ready for, and always confirm your coverage via the insurance carrier. Do enough research on these companies and always compare auto insurance quotes from different providers.
Fake Injury Claims
Fake injury claims are common between common drivers, especially when drivers exaggerate their injuries or damages to get you to pay more. Did you know that the average family pays up to an extra $400 to $700 per year? Families are especially prone to this as criminals assume that they are easily distracted or too eager to resolve the situation.
To prevent this, you should always report every accident, whether it’s major or minor.
Fraudulent Car Repairs
This is a common type of fraud among car mechanics and workshops. Some of these unethical mechanics may take advantage of the customer’s lack of knowledge of the vehicle and quote drivers a much more expensive price for repairs and maintenance than it really is. In extreme cases, they make deliberately sabotage your engine and so you will have to pay much more.
Hence, it wouldn’t hurt to get opinions from a few workshops before engaging one. If their accounts on your engine problems are different, then you have reason to be suspicious about their ethics.
Staged Accidents
Staged accidents happen when a group of scammers plan and organize an accident to pin on an innocent driver, making him or her pay the scammers hefty sums. These staged accidents are normally well planned and hard to prove innocence from.
Swoop and Squat
This involves the scammers forcing or creating a situation where the victim cannot brake in time, causing a rear-end collision and pinning the blame on the innocent driver.
Panic Stop
Some scammers might perform a panic stop, where they get in front of your car and jam the brakes, causing you to crash into the rear of his car. After which, they could claim that you were distracted and driving unsafely, thus making you compensate a hefty sum to them.
Drive Down
This happens during a routine conversation between drivers on the road when the scammer waves the victim to drive on or make a turn at an intersection. When the innocent driver makes his or her move, the scammer will speed up and cause an accident. After which he will pin the blame on the victim for causing the accident.
Fighting Against Car Insurance Scams
Now that you know of the common insurance scams, here are some ways to combat such scams.
Drive Well
The best chance of staying away from such frauds is to avoid getting into accidents. Thus, it is important to drive safe and drive smart! So, follow speed limits, road etiquette, and rules while also avoiding tailgating. All of this could prevent you from getting into accidents in the first place.
Report
However, getting into accidents is normally out of your control, so if you do really get into one, you need to know what to do then. Whether it is a minor or major accident, report everything to authorities or the police.
Having them documented can make it difficult for these scammers to exaggerate or falsify claims they were to make against you. On top of that, do take photos of the accidents in case you have to use them in court to defend yourself or to make claims against other drivers.
What To Do After
After the accident, you should get a reputable tow truck. Beware of fishy tow truck services that may inflate their price to take advantage of you. Make sure to get a reliable tow truck service so you will not be taken advantage of.
Also, if you do suspect that you are a victim of such insurance fraud, make sure to report the incident to your insurance agent as well as the police officer at the scene.
Conclusion
All in all, insurance scams can happen to anybody and everybody. It is important for you to be aware of the tricks and scams these frauds have up their sleeves. The first way of defending yourself is to be able to identify the fact that you are being scammed.
With the knowledge of their tricks, you can be sure to be ready to counter their scams effectively. We hope that this list will help you in the future and we wish you the best. Drive safe!
