scams are incredibly common, costing the average insurance customer an additional $400 to $700 in annual insurance premiums. Here are the most common car insurance scams to look out for.
Staging an accident: Scammers intentionally put themselves in a position to get hit by an unsuspecting driver so they can file a damage claim.
Faking an injury claim: Another driver claims phantom injuries after a car accident to claim medical expenses from your provider.
Crash for cash: Fraudsters use plausible fault to file fraudulent claims against your car insurance policy.
Airbag repair scam: Your insurance company pays for OEM airbag replacements after a collision, but the body shop fakes the repair instead.
Scam 1: Staged accidents
A staged auto accident is a type of hard fraud that typically uses the following structure:
A scammer plans out an accident in advance for one unsuspecting party.
High-end cars are often targeted because the scammers expect they can scam more money in an insurance payout.
Pro tip: Always document an accident scene and file a detailed police report with local law enforcement. You can also check an insurance agent’s license in the National Association of Insurance Commissioners’ (NAIC) consumer database.
Scam 4: Airbag repair scam
The airbag scam is one of the most notorious and dangerous
leaving you susceptible to major injuries and even fatalities in future accidents.
Key takeaway: Always ask for references and do online research to pick a trustworthy repair facility that will get your car back to proper pre-collision condition. It also doesn’t hurt to get your car inspected when you pick it up after repairs.
Effects of auto insurance fraud on providers and customers
Fraud schemes in the insurance industry are seen as victimless crimes that only affect car insurance companies, but they raise car insurance costs for all customers.
, fraud is a factor in one of every three insurance claims.
The FBI reports that policyholders pay $400 to $700 more in annual insurance rates due to false claims and other insurance scams.
The National Insurance Crime Bureau (NICB) reports that insurance fraud is the second most costly form of white collar fraud in the country.
The bottom line: Always stay alert while driving and thoroughly document collisions to lower your chances of becoming a victim of car insurance fraud. You’ll be helping yourself and your fellow drivers