Auto Insurance Rates: A Scam On The Roads

Auto insurance rates are a contentious issue, with many drivers questioning the value they get for their money. While car insurance is legally required, high premiums, unfair pricing models, and challenging claims processes have led to widespread dissatisfaction. Common complaints include expensive premiums, difficult and delayed claims processes, low or no payouts, and poor customer service. The primary grievance, however, stems from a lack of transparency regarding the factors that determine insurance rates, which often seem arbitrary and inequitable. This includes not only driving-related factors but also personal attributes like age, gender, job title, and credit score, which can result in discriminatory pricing. Additionally, the complexity of the insurance industry leaves room for scams and fraud, with staged accidents, false medical claims, and agent fraud being among the most common schemes. As a result, drivers are often left feeling confused, frustrated, and exploited by a system that is meant to protect them.

Staged accidents

• Swoop and Squat: This involves two vehicles trapping a victim and forcing them into a rear-end collision. The "squat" vehicle pulls in front of the victim, and the "swoop" vehicle cuts off the squat vehicle, causing the victim to hit the squat vehicle. The swoop vehicle then speeds away, leaving the victim responsible for the damage and any injuries to the occupants of the squat vehicle.
• Drive Down: There are two variations of this scam, the left turn drive down and the right turn drive down. In both cases, the scammer waves the victim to turn and then speeds up to cause a crash. In the left turn variation, the scammer may also block the victim from turning and leave them in the middle of the intersection, causing an accident with another vehicle.
• Wave Down: This scam involves two scammers in separate vehicles. One scammer waves the victim to signal that it is safe to pull out of a parking lot or side street. Once the victim proceeds, the second scammer collides with them.
• Rear-End Collisions: Scammers watch for the driver behind them to become distracted and then slam on their brakes, causing the driver to rear-end them.
• Sideswipe: This scam occurs in intersections where the borders of the inner and outer turn lanes are unclear. The fraudster occupies the outer lane and then sideswipes the victim's car as they are turning. Due to the ambiguous lane division, the perpetrator claims that the victim caused the accident.
• Panic Stop: A team of scammers fill one car and slam on the brakes in front of the victim, sometimes when the victim is distracted. The passengers in the scammer's car claim fake or exaggerated injuries. Since it is a rear-end collision, the victim is usually considered at fault.

To protect yourself from staged accidents, you can follow these tips:

• Be cautious of unsolicited assistance, both on the road and after an accident.
• Avoid tailgating and maintain a safe distance from other vehicles.
• Get a dashcam to record accidents and the events leading up to them.
• Document accidents by taking photos and videos of the damage, the vehicles involved, and the people involved.
• Call the police and request an official report, even for minor accidents.
• Be wary of "friendly" tow truck drivers who appear at the scene before you have called for help.
• Alert your insurance company if you suspect you are the target of a scam.

Fraudulent mechanics

• Glass fraud: A random inspection from a glass technician or an unsolicited offer to repair glass in your vehicle could be a warning sign. These scammers will use your information to file an "assignment of benefits" form and collect insurance money from an inflated claim. Windshield replacement scams are especially prevalent in Florida, according to the National Insurance Crime Bureau (NICB).
• Chop shops: Stolen vehicles are sometimes disassembled for parts that are used in dishonest repair shops.
• Phantom repairs: Some repair shops may charge for extra services that were not performed.
• Counterfeit airbags: After an accident, deployed airbags may be replaced with counterfeits during the repair process. This can put people's lives at risk as substandard airbags may fail to deploy properly.
• Unnecessary repairs: Mechanics may try to upsell you on repairs that you don't actually need. For example, they may recommend replacing your brakes even if they're still in good condition.
• Overcharging for parts: Mechanics may pressure customers by stating that they will buy and replace parts themselves, adding the cost to the final bill. Buying the parts yourself is usually a cheaper option.
• Not actually replacing parts: Even if you agree to let the mechanic buy and replace parts, they may not actually replace them, or they may replace them with used or damaged parts.
• Fluid flushes: Many vehicles have transmission fluids that are rated for the lifetime of the vehicle, and newer vehicles may have electric power steering that doesn't use any fluid. So, fluid flushes may not be necessary.

False medical claims

To avoid falling victim to false medical claims, it is important to document everything at the scene of the accident. Take photos of the damage to the vehicles involved and get pictures of the people involved in the accident, if possible. Note how many occupants are in each vehicle and gather comprehensive information from the other driver, passengers, and witnesses. It is also crucial to contact the police and file an official report, including the name of the attending officer. By having detailed documentation of the accident, you can protect yourself from potential false medical claims and prove your case if needed.

Additionally, it is recommended to choose reputable repair shops recommended by your insurance company. These shops have likely been verified for their work and reputation. Being vigilant and cautious can help reduce the risk of becoming a victim of false medical claims and other car insurance scams.

Agent fraud

Premium Diversion

This is when a dishonest insurance agent steals your premiums. They pocket your money and don't set up your coverage. So, when an accident occurs, you discover that you don't have any insurance to cover your claim and have to pay for the loss yourself. This is one of the most common forms of insurance fraud, according to the FBI.

Sliding

This practice involves an unethical agent slipping extra coverage into your policy without your knowledge. This sneaky scam can add hundreds of dollars to your annual premiums while increasing the agent's commission. Being vigilant and keeping a close eye on what you're buying can help lower the risk of falling victim to sliding scams.

Fee Churning

In this type of fraud, intermediaries take commissions from reinsurance agreements, gradually chipping away at your initial premium until there's no money left to cover claims.

How to Avoid Agent Fraud

To avoid agent fraud, it's important to do your due diligence and vet insurance agents carefully. Here are some suggestions:

• Ask for references to gauge the agent's professional standing.
• Confirm the agent's license by checking your state's license database or using the National Association of Insurance Commissioners' (NAIC) Insurance Agent/Broker Search Tool.
• Compare advice from multiple agents to assess the reliability of the information provided.
• Research any complaints lodged against the agent and the seriousness of those claims.
• Verify your coverage directly with your insurer.

Towing scams

There are several ways to avoid becoming a victim of a towing scam:

• Drive your car home if it is safe to do so, or request that the car be taken to a car storage lot or a shop of your choice.
• Make sure that the tow truck driver is the one you or the police called.
• Read carefully anything the tow truck driver asks you to sign, and get a receipt for the towing fee.
• Know what your insurance covers. If you have collision and comprehensive coverage, your policy will pay reasonable towing and storage fees.
• Report suspected scams to the relevant authorities, such as the National Insurance Crime Bureau (NICB) or your local police department.

It is also recommended to document the towing scene by taking photos of the company's vehicle and getting a copy of a damage report from the towing company.

Frequently asked questions