Car Theft & Insurance Fraud
Property crimes such as burglary, larceny-theft, and car theft occur on a daily basis across the U.S. Overall, more than 16,000 car thefts occur each year in the U.S. While thousands of car theft reports are legitimate, unfortunately, thousands more are not. Each year more than 6 percent of all auto insurance policy holder’s submit an auto theft claim after abandoning a vehicle and reporting it stolen.
Common types of insurance fraud include:
- Increasing a claim to cover the deductible – 40 percent
- Listing adults as main driver of a car being driven by an under age driver – 20 percent
- Omitting accidents/tickets from an insurance application – 14 percent
- Continuing medical treatment to increase the value of a claim – 11 percent
- Pretending a hit-and-run accident occurred to submit a claim – 7 percent
- Increasing a claim to cover the premiums paid – 3 percent
Other types of insurance fraud include staged accidents, personal injury mills, and paper accidents. Staged accidents occur when two vehicles with prior damage are brought together to make it appear as if the vehicles were involved in an accident. Personal injury mills occur when lawyers and physicians submit claims for patients’ non-existent or exaggerated injuries. Some lawyers and physicians may work alone, while others work together. Paper accidents are a form of insurance fraud in which no accident occurred, but false accident reports were filed to support insurance claims.
In some cases, however, motorists may become the victim of insurance fraud without even knowing it. According to the FBI, “caused accidents” is one of the biggest insurance fraud schemes in the nation. “Caused accidents” occur when an innocent victim becomes an unwitting participant in an actual accident, such as a sideswiping. Law enforcement officials call this, “swoop and squat.” Swoop and squat teams typically target solo drivers -- mostly women, and tourists. Other tactics include “drive down,” “start and stop,” and “sideswiping in a two-lane turn.”
As an innocent driver tries to merge into traffic, the suspect driver yields, waving on the other driver. As this innocent driver merges, the suspect driver intentionally collides with the victim and denies giving him the right of way.
Stopped in the same lane of traffic, the suspect's vehicle is positioned directly in front of the victim. The suspect starts to move forward as does the innocent driver. For no reason, the suspect vehicle suddenly stops short, causing the victim to rear-end him.
At an intersection that has two left turn lanes, the suspect crosses the center-line, intentionally sideswiping the victim's car. The suspect then alleges that the victim caused the collision by entering his lane.
Because of fake car theft claims and other types of insurance fraud, large insurance companies and rental car companies have been hit with millions of dollars in false claims. However, to avoid expensive trials, many insurance companies settle suspect medical and auto damage claims. Unfortunately, the costs are passed along to innocent consumers. Insurance fraud costs law-abiding U.S. citizens $20 to $30 billion annually. According to The National Insurance Crime Prevention Bureau, this means consumers will pay $200 to $300 in additional insurance premiums each year, higher taxes, and higher costs for goods and services.
To avoid becoming a victim of insurance fraud, always drive defensively. If you are in an accident, call the police immediately -- no matter what the circumstances may be. You should file an official police report in all cases. Do not hesitate. Make sure the details of the accident are precise in order to prevent the fraudsters from collecting on bogus damages. Also, take a head count. How many passengers were in the other vehicle? Get the other parties’ name, driver’s license number, and contact information. This shouldn’t be a problem if a police officer is present.
According to Allstate, this helps prevents frivolous lawsuits and claims paid to people who weren't actually in the car. Keep an accurate record of what happened for your personal records as well. *Immediately notify your insurance carrier if you are involved in any accident. Claim representatives are trained to recognize indicators of fraud and investigate suspicious claims.
If you are contemplating becoming involved in insurance fraud whether through a staged car theft or a paper accident, think twice. Auto insurance fraud is a felony. money laundering, lying to the police, theft larceny, and perjury. A conviction will result in but prison time, felony convictions, and fines of $10,000 or more. You will also have to pay the insurance company for financial losses as well.
U.S. Census Bureau, 2010 Statistical Abstract. www.census.gov
Louisiana State Police Department, Insurance Fraud/Auto Theft Unit, www.lsp.org
Find more information on auto insurance fraud.