We’re not even a month into 2012 and so far there have been over 200 incidents of car insurance scams reported across the nation. As the economy continues to struggle, we can expect the trend to continue ever upward. It’s a big reason why auto insurance premiums keep trending upward (an estimated 10% between 2008 and 2010, according to the Insurance Information Institute’s latest data). In fact, the National Insurance Crime Bureau estimates car insurance scams add between $200 and $300 a year to the average U.S. driver’s annual premium. Ouch! Because we’re here to help you get cheaper car insurance, we think it’s important that you know about auto insurance scams so you can avoid being a victim and report suspected crooks.
- Dodging Auto Premiums. Is it cheaper to buy car insurance across the state or county line? Well, just open a P.O. box there or use the address of a friend or relative to register and insure the car in the cheaper location.
- Faking Auto Theft. Monthly payments too high? Can’t afford to put gas in that Hummer anymore? Owe more on that BMW than it’s worth? Just dump those expensive wheels in a lake or park it in some deserted backwoods and report it stolen to the insurance company.
- Selling Out. Ask around and there’s probably somebody whoknow somebody who knows about a chop shop that will buy that over-priced, under-valued car or truck. It’s called vehicle give-up and it’s a growing trend.
- Of course, dishonest car owners aren’t the only ones gaming the system. While most auto repair shops play it fair and square, there are bad guys out there, too. Here are just two of their favorite car insurance scams:
- Inflating the Repair Bill. Unscrupulous auto repair shops use old parts to jack up the bill or charge the insurance company for work they didn’t do. You’re left with a car that’s unsafe to drive.
- Installing Bogus Airbags. Instead of replacing your deployed airbag with a nice new one, these guys use old rags or other junk, then turn around and charge your insurance company full pop for a real new bag.
- Repairing or Replacing Windshields. A guy walks up to you in a parking lot, flashes a business card and tells you your perfectly good windshield needs to be repaired. Guess what? He’s just the guy to do it. Except that the only thing he does is bill your insurance company for repairs or a new windshield. You’ve filled an unnecessary claim and unwittingly committed insurance fraud.