Maximizing Auto Insurance Claims: Strategies For Success

Auto insurance fraud is a serious issue, costing the US over $308 billion annually. There are several ways in which scammers target unsuspecting drivers, from staged accidents to false medical claims and agent fraud. One common scam involves posing as insurance agents and offering lower premiums in exchange for personal account information. In other cases, scammers create fake car insurance websites, luring drivers with the promise of cheap insurance and tricking them into buying fake policies. To avoid falling victim to these scams, it is important to do your research when shopping for auto insurance, compare rates across different companies, and be cautious of offers that seem too good to be true. Additionally, it is recommended to verify an agent's license and review policy documents carefully to protect yourself from potential fraud.

Staging accidents, such as turn drive downs, wave downs, and rear-end collisions

Staging an accident is a common way to scam auto insurance companies. This often involves multiple perpetrators and an unsuspecting victim. Here are some ways this can be done:

Turn Drive Downs

This scam involves luring a driver into making a turn and then setting up a collision. For example, one car might wave you on to make a turn, then block you from proceeding, while another car collides with you. In another variation, you might be preparing to make a left-hand turn. A driver coming from the opposite direction signals you to complete your turn but then drives into your car as you cross their lane. In both cases, the perpetrators will claim you pulled into traffic when it wasn't clear and will feign injuries. As a result, a fraudulent claim is filed against your insurance company, and unless someone suspects fraud and investigates further, the criminals profit.

Wave Downs

This scam involves two scammers in separate vehicles. One scammer gives you a wave, signalling that it's safe to pull out of a parking lot or side street. Once you proceed, the second scammer collides with your vehicle.

Rear-End Collisions

These scams can take several forms. One common tactic is for a scammer to watch for the driver behind them to become distracted and then slam on their brakes, causing the driver to rear-end them. Another variation is the "swoop-and-squat", in which two drivers force your car into a rear-end collision. The first vehicle drives in front of your car and comes to a sudden stop, then the second car abruptly pulls in front of them, causing you to hit the first car.

How to Avoid Staged Accidents

While it's not always easy to tell if an accident is staged, there are some red flags to watch out for. Be cautious of drivers behaving strangely or looking out of place, such as a driver repeatedly circling in a roundabout or waving you on when they have the right of way. Older cars or cars with damaged bumpers or broken taillights can also be a sign of a potential scam. If you suspect fraud, document everything, call the police, and notify your insurance company as soon as it's safe. Getting a dashcam can also help you record evidence of a scam.

Auto repair scams, including counterfeit airbags and unnecessary repairs

Auto repair scams are a common way for dishonest mechanics to take advantage of unsuspecting customers. One prevalent scam involves charging customers for unnecessary repairs or maintenance. For example, some mechanics might recommend changing your air filters or engine oil more frequently than is actually needed, or they might try to sell you new tires when a simple patch would suffice.

Another scam to watch out for is the use of counterfeit or salvaged parts. Dishonest repair shops may charge you for new parts but install used, damaged, or counterfeit ones instead. This is especially common with airbags, where unscrupulous shops will replace a deployed airbag with a previously deployed or salvaged one, or even attach a deployed airbag to the steering wheel to create the illusion of deployment, increasing the insurance claim amount. Not only are you being overcharged, but these parts may not work properly or meet safety requirements, putting you at risk.

To avoid becoming a victim of auto repair scams, it's important to be proactive. Ask friends or your insurance company for recommendations on reputable repair shops, and check for any complaints or red flags associated with the business. Get multiple estimates for any major repairs, and always ask for a detailed description of the proposed repairs, including the cost of parts and labor, in writing before authorizing any work. If you're unsure about the repairs, bring along someone knowledgeable about cars to get a second opinion. By being vigilant and informed, you can help protect yourself from auto repair scams and ensure you're only paying for the repairs you actually need.

Towing scams, where scammers take cars and demand high fees for their return

Towing scams are a common way for scammers to take cars and demand high fees for their return. This can happen in a few different ways, but the end goal is always the same: to get money out of unsuspecting victims illegally.

One way scammers operate is by monitoring private parking lots and towing away vehicles whose owners are not patrons of the businesses using the lot. Even if the car owner did use a business associated with the lot, these "bandit" tow truck operators will often dismiss this and tow the car away anyway. They then demand payment for the release of the vehicle, which is illegal if the car is still on private property. If the victim cannot or will not pay, the tow operator must release the vehicle. However, if the operator leaves the lot with the vehicle, they are in violation of various state and federal laws regarding the unlawful taking of a vehicle without the owner's consent.

Another type of towing scam is known as predatory towing. In this scheme, tow truck companies prowl parking lots looking for illegally parked cars. They are quick to tow your car, even if you've only been gone for a few minutes. These rogue operators charge exorbitant fees, leaving victims feeling violated and distrustful of all towing services.

A third type of scam is bandit towing, where a tow truck operator will swoop in immediately after an accident, offering to help when you're most vulnerable. Without the owner's consent, they'll load the vehicle onto their truck, promising to take it to a reputable body shop. Instead, they take it to an obscure storage lot and demand a high release fee along with daily storage charges.

To protect yourself from towing scams, it's important to be vigilant and aware of the signs. Legitimate businesses should always have phone numbers displayed on their trucks and provide written estimates before starting work. If a tow truck arrives too quickly after an accident or without being called, that's a red flag. Always ask for a written estimate before allowing any service, and be wary of excessive fees. Remember that you have the right to choose where your car is towed, and never rush into accepting help from a passing tow truck.

False medical claims, including forged medical bills and unnecessary procedures

To scam auto insurance through false medical claims, you can engage in upcoding, which involves billing for a more expensive service than the patient received. For example, you could submit a claim for Medicare reimbursement with incorrect Current Procedure Terminology (CPT) codes that don't match the services provided but allow for a higher reimbursement rate.

Another tactic is unbundling, where you first bundle or group together several medical services as one inclusive procedure to receive reimbursement for the single procedure and then submit another claim where the same procedure has been unbundled or separated into individual services to receive a second reimbursement for the same services.

You could also submit claims for services that were never provided, which is the most obvious form of fraudulent billing. Services so deficient that they provided no medical value can also be used as a basis for fraudulent billing.

Additionally, you can misrepresent your credentials, such as providing reimbursement claims with incorrect provider identification numbers or billing for services rendered by an unlicensed physician. This could also involve falsely representing that a teaching physician was present for procedures provided by a university's medical school.

Agent fraud, such as stealing premiums or slipping in extra coverage without your knowledge

Agent fraud is a lucrative scam that can cost unsuspecting drivers a lot of money. It involves an insurance agent stealing your premiums or slipping in extra coverage without your knowledge. This is sometimes called "premium diversion" or "sliding".

In the case of premium diversion, the agent pockets your money and doesn't set up your coverage. So, when an accident occurs, you discover that you have no insurance to pay your claim and are left to cover the loss yourself.

Sliding is a particularly sneaky form of auto insurance fraud. An unethical agent adds extra coverage that you didn't ask for into your policy. This can add hundreds of dollars a year to your premiums while also increasing the agent's commission. Vigilant drivers who investigate their agents ahead of time and keep a close eye on what they're buying are less likely to fall victim to sliding scams.

To avoid premium theft, it's recommended that you work with trusted agents and always verify your coverage independently with the insurer. Here are some ways to find a trusted agent:

• Ask for references: Request references to gauge the agent's professional standing and ensure their established track record.
• Confirm the agent's license: Validate their insurance license by checking your state's license database or using the National Association of Insurance Commissioners' (NAIC) Insurance Agent/Broker Search Tool.
• Compare advice: Seek advice from multiple agents to assess their recommendations. If an agent's guidance differs significantly from others, question the reliability of the information provided.
• Research complaints: An agent in good standing will typically have accessible information about their professional background. Research whether any complaints have been lodged against them and how serious those claims are.

Frequently asked questions