\Whenever there’s a safety net available, there will be people who take advantage of it to the fullest. According to AAA, fraud is a factor in one of every three insurance claims. That’s the case with car insurance because it’s seen as a victimless crime. The FBI reports that families actually pay $400 to $700 more in insurance premiums annually, in part because of car insurance scams.
What are some of the most infamous types of car insurance scams? There are a bunch, but here are five types of car insurance scams that are especially worth watching out for.
1. Staging an Accident
A staged accident can take many forms. In most cases, there’s one unsuspecting party that’s about to get in an accident that the scammer has planned out in advance. The goal is to get into a collision with your vehicle to either write off their vehicle or get non-related repairs covered and make it look like you’re at fault.
In a parking lot, it could be a driver scooting behind you as you reverse out of a spot. At a four-way stop intersection, they might wave you through then enter the intersection at the same time as you, claiming you’re the party to blame. They file a claim, you get penalized, and they get away scot-free.
2. Faking an Injury Claim
Not every accident includes injuries, but it’s plausible that someone gets hurt. One related to car insurance is a scam that goes like this: the accident is legitimate but the scammer looks to get a settlement because they “got whiplash” or have “phantom pain” related to the accident. It milks your insurance policy for liability.
3. The “Crash for Cash” Scam
It’s the stuff movies are made of. The scam “crash for cash” could be for various reasons and by all types of shady people. What happens? You’re driving along and someone cuts you off close, then slams on the brakes. Since in a rear-end collision the person at the rear typically gets nailed as “at fault,” the scammer can take control of the situation and make any fraudulent claims they want, so long as it’s plausible.
One of the car insurance phone scams is for the scammer to give you a phone number for their “agent,” who collects your info and makes a fraudulent insurance claim (or maybe several) against your policy. High-end cars are often targeted because the scammers expect they can scam more money. The key is to document the collision well and always be aware of your surroundings.
4. Airbag Repair Scam
You need to vet your collision repair shop well, ensuring they’re going to fix your car back to its pre-accident condition. One of the notorious car repair insurance scams is old, but it’s still around: the airbag scam. When fixing your car, the insurer pays to replace expensive airbags but the repair shop installs recycled parts and pockets the difference. Or, they may not install an airbag at all, filling the space with other materials. It’s unsafe and may even be criminal.
The best way to avoid this scam is to pick a trustworthy repair facility, ask for references, and get your car inspected when you pick it up after repairs.
5. Rental Car Insurance Scams
Unsavory rental agencies have been known to collect off unsuspecting renters. Many rental cars have damage that goes unnoticed initially that the agency would have to pay for. Or, they can work a little scam and get it covered by someone’s insurance. Or, you might have to pay for it yourself.
Let’s say you’ve just finished a family vacation with the kids. When you return a vehicle that has pre-existing damage on it, the rental agency claims, usually forcefully, that you caused it and you’ll have to pay for it. Your rental car insurance may cover the repair, but often the vehicle downtime is part of your rental contract and you’ll have to pay out of pocket for every day the car is in the shop, unrentable.
First, you should always ensure you have sufficient rental car insurance to avoid being susceptible to this scam. And secondly, document any damage to the car before you sign the rental contract and take photos on your phone as proof.