Having a hard time finding cheap car insurance quotes? Blame the cheaters who file fraudulent claims. The cost of car insurance scams increases the amount insurance companies have to spend to investigate and prosecute suspected crimes. It cuts billions from insurance company profits every year. So no big surprise…the car insurance companies pass those costs along to you. In fact, the National Insurance Crime Bureau estimates that phony claims add an average of $200 to $300 to annual car insurance premiums for all of us.
Insurance Fraud Types
Car insurance fraud comes in two basic flavors: soft and hard. Both drive up costs and affect your ability to find cheap auto insurance quotes:
- Soft car insurance fraud typically takes the form of padding legitimate claims. For example, the fraudster includes that dent his kid put in the fender a year ago into the claim he’s making today. Or he cuts a deal with the repair shop to pad the repair bill.
- Hard car insurance fraud is about creating phony accidents or filing bogus claims. While this kind of fraud is usually undertaken by an individual, there are many cases on record where several people have conspired to fake an accident and split the ill-gotten rewards. Typical types of hard auto insurance fraud include filing a phony hit and run claim, staging an intentional accident or purposely torching, sinking or otherwise totaling a car to get out from under steep car payments.
How to Identify Insurance Fraud?
Below are just a few ways law enforcement and insurance investigators identify suspected car insurance fraud. While none of them alone is conclusive evidence of fraud, several together are enough to raise red flags.
- A pattern of similar claims
- Inability to adequately document medical bills or lost wages
- Pain or injury far beyond what is typically claimed
- Excessive, unexplained change of address, phone number and employment
- Claimant has excessive debt, bankruptcy or similar financial problems
- Claimant avoids personal meetings with claim investigators or insists on meeting in public places instead of his or her home
If all of this makes your blood boil, the National Insurance Crime Bureau even has a toll-free hotline number where you can anonymously rat out a cheater, become eligible for a reward and maybe even help bring about cheap auto insurance.