Cheating Auto Insurance: Strategies For Lowering Your Premiums

Auto insurance fraud is a serious issue that costs drivers billions of dollars each year. While insurance companies may cheat customers out of their money, individuals also attempt to cheat auto insurance providers. This can take the form of staged collisions, where criminals devise elaborate staged accidents – sometimes including fake injuries – to collect on insurance policies. Additionally, individuals may attempt to defraud insurance companies by providing inaccurate information or exaggerating claims. It is important for both insurance companies and individuals to be aware of the signs of fraud and to take steps to protect themselves.

Fake companies

• Red flags: Fake companies often sell premiums that are 20%-50% lower than the premiums of similar policies offered by other companies. Their agents may pressure you to sign policies immediately, threatening that premiums will increase if you wait. They may also require cash-only payments.
• Verify legitimacy: To protect yourself, verify the legitimacy of the company by contacting your state's insurance department to confirm that the company is licensed and legitimate. The National Association of Insurance Commissioners (NAIC) recommends following the "Stop. Call. Confirm." approach.
• Payment methods: Always make payments directly to the insurance company instead of paying an agent. Most insurance companies allow you to make premium payments online. If you prefer to mail your payment, make the cheque out to the insurance company and double-check the company's address.
• Monitor your policy: Keep track of your policy status to ensure it is active and has not been cancelled or lapsed without your permission. You should receive a copy of your policy terms and annual statements upon renewal. Many companies offer online access to policies, making it easier to monitor.
• Understand the policy: If an agent suggests replacing your policy, ask for details about the new policy and how it benefits you. In some states, agents are required to provide a disclosure statement or a ledger comparing the new policy to the old one. Make sure you understand these documents before proceeding.

Dishonest agents

While it is important to note that cheating auto insurance is illegal and unethical, here is some information on dishonest agents.

Dishonest insurance agents may employ various tactics to maximise their profits at the expense of their clients. For instance, they may push for a quick settlement, which can result in a lower payout for the client. They may also try to persuade clients not to file a claim, arguing that it is not worth the hassle or that the client does not qualify for compensation. In addition, dishonest agents may request a recorded statement from the client, which can later be used against them to reduce the settlement amount. Another tactic is to ask for a signed medical release form, giving the insurance company access to the client's entire medical history. This allows the insurance company to deny the claim on the basis of pre-existing conditions unrelated to the accident.

To avoid being taken advantage of, clients should be cautious when dealing with insurance agents and carefully review all documents before signing. It is also advisable to consult with an independent attorney who specialises in personal injury cases to ensure that their rights and best interests are protected.

Unfair practices

Insurance companies may also use unfair practices to avoid paying victims as much money as they deserve. For example, insurance adjusters are incentivised to save the company money, so they may use sneaky tactics to avoid paying out claims. They might persuade you not to file a claim, or they might try to find reasons why you don't qualify for payment.

• Asking for a recorded statement: Insurance adjusters may ask for a recorded statement after an accident, which they can then use against you to twist your words and make you look bad, thus making your claim ineligible. It is not legally required to provide a recorded statement, and it is often not in your best interest to do so.
• Pushing for a quick settlement: Insurance companies may try to get you to accept a quick settlement before you fully understand the extent of your injuries and the value of your claim. This tactic saves them time and money and usually results in a lower payout for the victim.
• Asking for a signed medical release: An insurance adjuster may pressure you into signing medical release forms, giving them access to all your medical records. They can then use any information they find to deny your claim, even if it is unrelated to the accident.
• Causing confusion: Insurance companies may take advantage of the complex jargon and contracts involved in insurance claims to confuse victims and push them into accepting inadequate settlements or signing away their rights.
• Refusing to renew: Insurance companies may drop your coverage or refuse to renew your policy if they suspect that you are considering filing a claim. It is important to be cautious when inquiring about the possibility of filing a claim, as your insurance company may use this against you.

Staged collisions

Left Turn Drive Down:

While preparing to make a left turn on a four-lane road, an approaching driver slows down, waves for you to turn, and then suddenly blocks your path. As you try to avoid the collision, another car slams into the side of your vehicle. The driver who waved you through flees the scene, leaving you to be blamed for pulling into oncoming traffic. The driver and passengers of the car that hit you will all claim injuries, and a fraudulent insurance claim will be filed against you.

Right Turn Drive Down:

When making a right turn at an intersection, another vehicle suddenly runs into the back-left side of your car. The driver and passengers of the other vehicle will claim that you pulled into traffic when it wasn't clear, and they will feign injuries. As you seem to be at fault, a fraudulent claim is filed against your insurance, and the criminals profit unless the fraud is detected and investigated.

Merging into Traffic:

As you merge into traffic from a curb, a car deliberately crosses from the left lane and crashes into you. The occupants of the other vehicle will claim that you pulled into traffic when it was unsafe, and they will all report injuries. A fraudulent claim is then filed against your insurance company, and the criminals receive compensation unless the scam is uncovered.

"Squat" and "Swoop" Vehicle Scheme:

This scheme typically involves three vehicles, two driven by criminals and one by an innocent victim. The "squat" vehicle pulls in front of the victim's car, and the "swoop" vehicle cuts off the squat vehicle, causing it to brake suddenly. The victim, unable to react in time, rear-ends the squat vehicle. The swoop vehicle then speeds away and is not seen again. The victim is left responsible for the damage and injuries to the squat vehicle and its occupants.

To protect yourself from becoming a victim of staged collisions:

• Maintain a safe distance from the vehicle ahead and always look well beyond the front of your car while driving.
• If you suspect a staged collision, call the police immediately and notify your insurance representative.
• Take precautions when involved in any collision: record the other vehicle's license plate number, collect the driver's license and insurance information, photograph the damage, and watch for scam warning signs.
• Never give your wallet to anyone at an accident scene, and do not provide cash as a way to settle damages.
• Insist on obtaining identification and contact information from all individuals involved in the collision.
• Keep a camera in your car to capture photos of the vehicles and passengers involved, which can be helpful for criminal investigations.

Unnecessary medical treatments

Performing and billing for unnecessary medical treatments is a common type of health insurance fraud. This involves medical providers performing medically unnecessary services or procedures for the sole purpose of generating insurance payments. This can include diagnostic-testing schemes, such as nerve-conduction and genetic testing, as well as performing unnecessary surgeries.

In one example of this type of fraud, an Ohio cardiologist was sentenced to 20 years in federal prison for performing unnecessary catheterizations, tests, stent insertions, and causing unnecessary coronary artery bypass surgeries as part of a scheme to overbill Medicare and other insurers by $29 million.

Another example involves a Virginia OB/GYN who was arrested and accused of performing unnecessary surgeries on female patients to collect insurance payments. Numerous former patients have come forward, and a hotline for potential victims has been established. Some of the medically unnecessary surgical procedures alleged to have been performed include hysterectomies, dilation and curettages, and the removal of ovaries and fallopian tubes.

To avoid becoming a victim of this type of fraud, it is important to be knowledgeable about and aware of the health care services you receive, keep good records of your medical care, and closely review all medical bills you receive. If you suspect fraud, report it to your insurance company and, in the case of health care fraud, to the FBI.

Frequently asked questions