Insurance Fraud: Deceiving Vehicle Claims

Vehicle insurance fraud is when someone deliberately misleads an insurance company to obtain a benefit they are not entitled to. This can be done by giving false or misleading information or documentation. Insurance fraud can be as simple as lying about your address or as serious as faking an accident. It can be perpetrated by or against the policyholder. The consequences of insurance fraud depend on the nature of the fraud, ranging from denied claims to thousands of dollars in fines and jail time.

Soft fraud

Accidental soft fraud is also common, where people unintentionally overstate or overestimate the damages. To avoid this, it is important to keep a solid record of any incidents by taking photos, notes on injuries or damages, and getting quotes from mechanics and physicians.

Hard fraud

• Staging a car accident: This involves a driver intentionally causing a crash to claim insurance money. For example, a driver might wave you through a left turn and then hit you, or they might swerve to hit your car as you pull out from the curb.
• Making fraudulent damage or theft claims: This could involve someone destroying their own vehicle, such as by setting it on fire, and then filing a claim with their comprehensive coverage, saying it was an accident. Alternatively, someone might abandon, destroy, or sell their vehicle and claim that it was stolen, intending to pocket the payout for a legitimately stolen vehicle.
• Staged collisions: These are a common type of hard fraud, where two cars work together to manoeuvre another driver into a rear-end collision, known as a "swoop and squat". Another variation is the "drive down", where a scammer tricks a driver into turning and then collides with them.

Staged accidents

There are several common types of staged accidents to look out for:

• Swoop and squat: Two vehicles trap a victim and force them into a rear-end collision.
• Drive down: While waiting to make a left turn, the victim is tricked into turning early by an oncoming driver who collides with them.
• Wave down: Two vehicles set up a crash by waving to the victim that it is safe to pull out of a parking lot or side street with obscured vision.
• Enhanced damages: After a legitimate accident, the driver who is not at fault causes additional damage to their vehicle to increase the cost of the claim.
• Panic stop: A vehicle strategically prompts the trailing car to rear-end them by abruptly braking.
• Sideswipe: A driver manoeuvres to sideswipe another vehicle in the inner left-turn lane of a dual left-turn lane intersection.

To protect yourself from staged accidents, it is recommended that you:

• Get a dashcam to record what happens before an accident.
• Document and identify all damage done to the fraudster's car and everyone who was in their vehicle, and record their contact information.
• Call the police whenever you're involved in an accident where someone claims to be injured.
• Tell the police and your insurance company that you suspect fraud.
• Watch out for drivers behaving strangely or who look out of place.
• Don't give the other driver cash or payment.

False claims

Individuals may stage accidents to create false claims, taking advantage of their auto insurance policies. These staged accidents often occur in populated urban areas and affluent communities, where people are perceived to have superior insurance coverage. Staging accidents can involve intentional collisions with moving or parked vehicles, and there are often multiple parties involved in the scheme, including fake witnesses, insurance agents, and surrounding companies.

Another form of false claim is filing multiple claims with different insurance providers for a single accident, which is considered "double dipping" and can result in fines or jail time. Additionally, false reporting of stolen vehicles is also a type of vehicle insurance fraud, where individuals abandon or dispose of their cars and then claim them as stolen to receive a settlement or a replacement vehicle.

Premium fraud

In the context of vehicle insurance, premium fraud can involve a vehicle owner using a false registration to cut insurance costs. If the owner lives in an area with high premium rates due to recurring car theft, they might try to register their vehicle in a different area with lower premiums.

Another example of premium fraud is when repair shops charge an insurer for extensive work but use cheap or fake replacement parts. They might also overcharge the insurer by overstating the extent of the necessary repairs.

Frequently asked questions