The Most Common Types of Car Insurance Fraud

Car insurance fraud usually takes the form of fire, theft, and vandalism, all investigated and prosecuted by car insurance companies.
Written by Jason Unrau
Reviewed by Carrie Adkins
They are options listed on your
car insurance
policy: fire, theft, and vandalism. For some insurance providers, one or more may be included in
comprehensive coverage
. Others offer them as add-ons. Isn’t it great to have such customizable car insurance?
Unfortunately, there are some people out there who try to defraud their car insurance. It happens for several reasons:
  • They may not be able to afford their car anymore
  • Selling their car isn’t going as quickly as they’d hoped
  • The car has expensive mechanical problems
  • The car’s insured value is more than the car is actually worth
That’s when it happens - the car mysteriously disappears or is damaged beyond repair. The car owner is looking for a payout that benefits them more than dealing with their car in an upright and legal way.
Of the many types of insurance fraud, the three stand out the most: car fires, car theft, and vandalism.

Method 1 of 3: A devastating car fire

It sounds all neat and tidy. Torching a car makes any previous problems or damage extremely difficult to detect. But through the fire and smoke, there’s one glaring issue: car fires aren’t a common occurrence.
Poor maintenance, electrical flaws, fuel leaks, and manufacturer defects can cause car fires. Those typically occur while you’re driving, not while the car is parked. A parked car on fire is quite commonly investigated as arson for that reason. That’s usually for insurance fraud purposes.
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Method 2 of 3: A convenient car theft

Making a car disappear is easy - just leave the keys in the ignition in a seedy neighborhood or let some unsavory acquaintances know it needs to go away for a tidy sum. But car thefts are way down in recent years. All cars since 2008 are equipped with factory-installed engine immobilizers. A key is required to start the car - either that or an electrical engineering degree and automotive knowhow.
Car thefts can still happen on older cars, or if there’s an inadvertent mistake made where thieves have an opportunity to get your keys. You can rest assured that your car theft will result in an investigation. In most cases, the car owner is going to be an initial suspect in the disappearance also.

Method 3 of 3: Mess it up really well

An angry ex-girlfriend, an obsessive road rager, or a rebellious youth could legitimately vandalize your car. This type of damage is often smashed windows, dinged-up doors, keyed paint, and slashed tires. It’s also a popular way of committing car insurance fraud.
Because vandalism is usually a crime of passion, you’ll be asked who you think is responsible for the damage. If you are not willing or able to give the investigators a viable lead, you’ll be the one who looks suspicious.
Fortunately, car insurance companies do their best to keep fraud claims at bay. Whole teams of special investigators comb through claims that seem suspicious, especially these three common types of car insurance fraud. And when a fraudulent claim is discovered, the insurance company prosecutes to the fullest extent, commonly suing the fraudster for the full cost of damages. Criminal charges could be pursued too.
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