Car Insurance Scams to Watch Out For

Both soft and hard insurance scams can raise your car insurance costs and leave you paying more than you should for your policy. Read this article on car insurance scams to learn how to avoid them.
Written by Jacoba Bood
Whether it’s a little white lie told to earn a lower rate or a scam that’s more serious, protecting yourself by filing a police report and talking to your insurance company is the best way to avoid the financial repercussions of insurance fraud. 
  • The insurance industry is subject to fraud in the form of fake injury claims, agent fraud, accident staging, and car repair fraud. 
  • In most cases, victims of car insurance fraud are innocent policyholders who may face increased rates due to the scam. 
  • Other drivers, insurance agents, and mechanics can all be perpetrators of insurance fraud.
  • Knowing what to look for can help you prevent common
    car insurance
    scams that could leave you paying higher rates for your insurance coverage.

The two main types of insurance fraud

There are two major types of insurance fraud:
  • Soft insurance fraud: Insurance fraud is considered “soft” when an individual provides false information or makes minorly false claims in order to receive a lower premium or higher insurance payout. “Soft” insurance fraud is most commonly committed when buying a car or making an insurance claim. 
  • Hard insurance fraud: Hard insurance fraud is a more serious crime, and one that is typically premeditated. Examples of “hard” insurance fraud include staging an accident or fabricating the cause of property damage in order to receive an insurance pay-out. 

Soft insurance fraud

It is possible to commit soft insurance fraud when buying car insurance or when making a claim.
If you provide false information to get lower insurance premiums or to get accepted for a loan, this would be considered soft insurance fraud. For example, purposely not including
a high-risk driver
in your household on the policy, even though you know they'll be using the car, counts as soft fraud.
People can also commit soft fraud during the claims process when they knowingly exaggerate the damage caused by an otherwise valid accident. For example, if you tell the insurance company your windshield was cracked in an auto accident when in fact it was cracked before, that would be soft fraud.

Hard insurance fraud

Hard insurance fraud is more deliberate and intentional—which makes it easier to catch, for the most part.
If you were to plan or stage an accident or bodily injury just so you could make a car insurance claim, that would be considered hard insurance fraud. The same goes for any deliberate acts of theft or arson that result in a fraudulent claim.
An example of hard insurance fraud would be purposely trashing a car and making it look like an accident, and then taking the insurance payout when it is deemed a total loss.

The most common types of car insurance fraud

Whether it's soft fraud or hard fraud, there are many scams to look out for. Here are a few of the most common auto insurance scams out there, and how you might get tangled up in them: 

Fake injury claims

What it is: Fake injury claims happen when you get into an accident with a driver who exaggerates their injuries to get more money from the insurance company.
Why it’s dangerous: It might seem minor, but families could see their insurance policy increase by up to $700 a year for
bodily injury liability
How to avoid it: The best way to avoid fake injury claims is to report any car accidents that you are involved in to the police—even if they’re nothing more than a parking lot fender-bender. Distracted or busy drivers—such as parents—are most vulnerable to attracting drivers who might fake their injuries. 
Expert tip: An official police report will help nullify any exaggerated injury complaints.

Agent fraud

What it is: Agent fraud is when you are scammed by an insurance agent who doesn’t fulfill their promises, or who unknowingly adds extra coverage to your policy to increase your premium.
Why it’s dangerous: The practice of adding additional coverages to your policy without your consent is called sliding—and it can cost you hundreds of extra dollars per year. Agents can also commit fraud by saying that they will set up a coverage option for you, but then pocket the cash instead.
How to avoid it: It’s important to always review your policy details thoroughly and carefully to make sure you are paying for everything you want—and nothing you don’t. First-time buyers tend to be especially vulnerable to agent fraud. Be wary of agents who seem pushy or are all too eager to get your personal details.
Expert tip: Even if you work with a trustworthy provider, mistakes can happen at any time. Using an AI-based tool like
is the easiest way to circumvent agent fraud and find a car insurance policy that is customized for you.
Key Takeaway Fake injury claims and agent fraud are two of the most common types of auto insurance fraud you’re likely to encounter.

Fake "helpers"

What it is: Sometimes scammers will pose as "helpers,” arriving at the scene of an accident and pretending to be some kind of authority just to get your information. Fake helpers—aka "bad samaritans"—often pose as doctors, lawyers, or insurance experts. They will then use their supposed authority to get your personal insurance information. 
Why it’s dangerous: Once a fake helper has your insurance information, they might file illegitimate claims that could significantly raise your premiums.
How to avoid it: It is easy to feel disoriented and vulnerable after an accident, so make sure not to give your personal information to anybody who wasn’t directly involved in the accident. Watch out for people who arrive and seem overly eager to help or are asking a lot of questions. 

Accident staging

What it is: Insurance scammers will often plan and stage an accident involving other innocent drivers so that they can get a payout. Staged accidents tend to be one of the more intricate and well-planned insurance fraud schemes out there.
How to avoid it: Be sure to collect as much evidence as possible after an accident—especially if you suspect it was staged. It can be difficult for an innocent driver who gets caught up in these schemes to prove that fraud occurred. 
Some scammers will even bring forth fake witnesses or doctors to back their stories. Here are some of the most common types of accident staging schemes:
  • Drive down schemes: Drive down schemes usually happen at a corner or merge lane where a con artist will wave a driver on and then drive into their path. If the con artist gets hit, they can claim that the innocent driver was at fault for not yielding. Scammers might also coax a driver to make a left turn and then block the intersection to cause an accident.
  • Sideswipes: Con artists might take advantage of unclearly marked turning lanes to sideswipe cars and cause accidents. Since the lanes aren’t clearly marked, it is easy for the scammer to argue that the innocent driver was at fault. Sideswipes usually happen in double-turn lanes, with the con artist hitting the other car from the outside lane.
  • Swoop and squat scams: Swoop and squats are schemes that force innocent drivers to rear-end a scammer’s car. Swoop and squat con artists will use two cars—one to drive in front of the target driver and the other to cut the car in front off, so it gets rear-ended. There may even be a third car that prevents passing. Once the vehicle in front is hit, the second car will dodge the scene, leaving the innocent driver at fault.
  • Panic stop cons: During a panic stop scam, a scammer will slow down or abruptly slam on the brakes so they get rear-ended by the car behind them, and can then claim fake injuries. In many panic stop scams, the vehicle will be full of pretending victims, all of whom will claim their separate damages.
Remember to collect as much evidence as possible if you’re involved in an accident, especially if you suspect it may have been staged.

Car repair fraud

What it is: Mechanics have specialized knowledge that makes it easy to overcharge for parts and services. Some body shops or repair shops might charge a high price for low-quality parts, or insist on performing services that aren’t necessary—or they might even charge for extra services that they don’t follow through on.
How to avoid it: Most car insurance companies or auto clubs will provide a list of trusted mechanics in your area to help you avoid this type of fraud. Some insurers will also back claim-related repairs when done by a trusted mechanic. 
Expert tip: Sticking with providers listed by your insurance company is an easy way to help ensure that you don’t fall victim to car insurance fraud.

Protecting yourself from insurance scams

Unfortunately, insurance fraud costs the most for innocent policyholders, who often wind up with increased insurance rates. The good news is, there are ways you can protect yourself against fraud: 
  • Drive defensively: Driving at a reasonable speed will give you more time to react to a staged-accident scenario. It also helps to keep ample space between yourself and other vehicles so you will have time to respond to sudden stops.
  • Collect lots of evidence: The more notes and photos that you take down after an accident, the better. Photos help to establish the facts. Notes made at the scene can help back your story and support your claim. A dashcam might be a splurge, but it is one of the most effective ways to prove what happened.
  • Get an official police report: It is always a good idea to call law enforcement if you are involved in an accident and need to make a claim. You are already legally required to call the police if the damage is likely to be $1,000 or more. However, it’s usually a good idea to get an official report regardless, even if the damage seems minor.
  • Be wary of bystanders: Most bystanders to an accident will just want to help, but some could have less noble intentions. Accident scenes can often attract scammers and con artists looking to make a quick buck. Be especially wary of people who ask many questions, try to get your personal information or claim to be some kind of authority.
  • Notify your insurance company: You should always reach out to your insurance company as soon as possible after an accident—but this is especially true if you suspect a scam. Be sure to explicitly mention that you suspect fraud might be involved. The same goes for when you talk to the police.
  • Report it: If you think you might have been the victim of an insurance scam, you should report the incident to the
    National Insurance Crime Bureau
    (NICB). The NICB may work with the police and your insurance carrier to investigate the fraud. No matter what, when you report a scam, you also make it less likely that it will happen again.

What to do if you get scammed

If you suspect that you’re the victim of car insurance fraud, take the following actions:
  • Talk to your insurance company: If the circumstances around an accident feel suspect, report them to your insurance company. The sooner you report suspicious activity, the more likely your insurance company is to take it seriously. 
  • Carefully document the scene: Official records like receipts, photos, and invoices can often be used to refute bogus claims. Be sure to keep your insurance policy, estimates, and records of payments evidence handy so that you can access them as needed.
  • Consider legal action: Depending on the specifics of your claim, you could also consider taking legal action. Be sure to talk to a lawyer to find out if you have a strong case before you pursue this option.
  • Report the fraud: If you suspect fraud, call the National Insurance Crime Bureau (NICB)’s phone number at 800-835-6422, Monday through Friday, 7 am to 7 pm CST. 
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If you are involved in a suspicious accident, contact the police and your car insurance provider right away. Then you can reach out to a specialized institution to report the incident. The
National Insurance Crime Bureau
Coalition Against Insurance Fraud
(CAIF), and
National Association of Insurance Commissioners
(NAIC) all deal with car insurance scams.
Some demographic groups may be more likely to be targeted for insurance fraud, such as women, luxury car drivers, seniors, and people driving work vehicles or tow trucks. In reality, though, anybody can be a victim.
Fraudsters often have certain “tells” that can tip you off to the fact that you’re being scammed. Someone who seems unusually knowledgeable about car accidents and car insurance claims, or who has a history of making multiple insurance claims in a short period, may likely be a scammer. Similarly, individuals who claim extensive damage or injuries but refuse to file a police report should also be considered a red flag.
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