There’s a reason why people opt for auto insurance. In this world of constant accidents and damages that take a fortune to repair, auto insurance protects you from expensive repair charges. In return, all the insurance company asks for is a lot of upfront money and then an expensive annual or monthly premium.
Since most people don’t want their cars to get damaged, they never make a claim, but keep paying the insurance premium. This is the reason why insurance frauds are a very common practice in the US. Let’s see what it is and the ways to avoid car insurance fraud.
What is Insurance Fraud
Referring to which entity the fraud is being done, insurance fraud can have two meanings. There are insurance frauds that are committed against insurance companies by policyholders to make fraudulent claims and get the money. The other type is done to customers either by some shady companies or garages to extract more money. Both are dangerous, illegal, and unethical.
Insurance frauds can be categorized into two groups; lies and crimes. Lies are the “soft” fraud where either the company or the customer lies about certain situations to get lower rates (for customers) or charge more than normal (for companies).
Crimes are the “hard” fraud that straight-up involves committing illegal activities to either avoid paying or making a false claim by creating false scenarios (for customers) or by scamming customers or avoiding paying for claims (for companies).
Let’s look into these frauds in detail, starting with the insurance frauds for customers, done by companies. It is very important for you as a customer to be aware of such frauds and save yourself a lot of hassle, and money.
Insurance Frauds Against Customers
There are so many ways and cases where people have been scammed for buying insurance policies. It is either that the policy is useless and ineffective, or downright paying for a scam. Then there’s the most common price gouging to charge you more than normal. Here are some of the insurance frauds against the customers.
The first thing that one should make sure of is that they are buying auto insurance policies from real companies and not some “agent” or mediator who takes the money. Use the power of the internet and find the best and cheapest car insurer with legit reviews and operations.
Always keep the receipt of premium payments in a well-organized place. It is also safe to pay digitally, through a card or cheque. No matter what document you have from the insurance policy, always keep it securely.
Never Share Private Information
People have complained of getting calls from numbers that claim to be from their insurance companies, asking for their personal information. Do not share any sensitive information with them, or make any payment.
Many repair and modification shops will overcharge you for repairs, especially for people who are not very familiar with the basics of cars. Always choose the repair shops recommended by your car insurer, and always ask for an estimate before the repair so that the prices cannot be inflated.
In an Accident
If you are involved in an accident, the insurance company will look for all the possible ways to discredit the damage if there is no proof available. This is why you should always make sure to have some. Right after the accident;
- Make sure you are okay
- Call 911 immediately
- If you can, take pictures of the accident and the damage
- Note down the license plate of the other car, and the driver’s information
- Avoid arguments with anyone, talk only to the cops and your insurance agent
- Always have a dashcam to record the accident and have solid proof
If You Get Hurt
Unfortunately, if you get hurt in an accident and have personal injury protection coverage, or something similar, then it is very important to proceed with caution to save yourself from a monetary accident. Here are some things you can do to ensure a fraud:
- Seek medical help from trusted and licensed medical professional
- Keep records of all the treatment, appointments, etc carefully
- Read your policy’s coverage and make sure what’s covered in the policy and what’s not.
Insurance Frauds Against Companies
There are many frauds committed by customers against companies to make fraudulent claims. This is more common than you might think and very illegal. It’s a felony that can land someone in the state prison for up to five years and an around $50,000 fine. These two are good enough reasons to avoid committing such frauds.
Many people create fake accident scenarios with an accomplice as the driver at fault and a planted witness in the hopes of getting a big collision claim. The insurance company will investigate fiercely and if caught, you might lose more than a damaged car. Do not try it as it is illegal in all the states in the US.
When the car is old and almost broken, and someone has been paying the hefty insurance premium for years, they find getting rid of the vehicle and making an insurance claim to get a big sum of money as the best way to get their lost money back. It includes purposely totaling the vehicle, burning it, dumping it somewhere, etc.
Areas with higher rates of vehicle theft have higher insurance rates. This is why many people give false information about the garage location to save premium costs. Sometimes people also inflate the cost of the repairs to get more money from the company. While these are just lies, they are punishable felonies. So it is better to avoid them.