Auto Insurance Scams To Know And Avoid

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Auto insurance fraud isn’t something we think about often, but it’s likely it could happen to you.

Auto insurance fraud incidents are believed to cost $20-30 billion nationally every year. This translates into $200-300 in additional insurance premiums each year for those affected.

California, Florida, Texas, New York and Maryland are the top five states for fishy auto insurance scams, but you’re at risk no matter where you live.

Fast Facts

• Insurance companies in the U.S. have reported a 102% increase in suspected cases of staged accident fraud from 2008 to 2011
• These scams are often conducted by organized groups that work in teams and use multiple vehicles and drivers
• Their goal is to trick you into forking over cash to pay for the damage    and to defraud insurance companies by filing false injury claims from fake accidents

Common Scams & Staged Accidents

The Swoop and Squat

How it happens:

• The scammer will slow down or stop in traffic, at an intersection or on-ramp, or swoop in front of you
• This causes you to crash into them from behind, putting you at fault as the rear driver

How to avoid it:

• Don’t follow other cars too closely and always allow plenty of room to stop quickly

The Bad Samaritan

How it happens:

• After getting in an accident, you’re approached by someone posing as an insurance official or consultant, who will convince you to go to a certain body shop, lawyer or health clinic
• This is a set-up to get your information and use it to file false insurance claims

How to avoid it:

• Conduct all necessary business with your insurance company and the other driver’s insurance company
• Don’t give any information to anyone else during the post-accident process

The Fake Injury

How it happens:

• You get in an accident and the driver immediately reports back pain, whiplash, etc.
• The driver seeks hospitalization and files a claim with your insurer to cover expenses
• Scammers will choose injuries such as whiplash that are hard to display on X-rays and may pay off medical professionals to corroborate their injuries and ensure a payday

How to avoid it:

• Pay attention to the dirver after the accident. If they act fine, but start acting injured after the police show up, this scam is probably happening
• File a police report, even if it’s a minor accident, so you have an official record of what happened

The Phantom Victim

How it happens:

• The other driver will attempt to file injury claims for additional passengers in the car, even if there were no passengers

How to avoid it:

• When gathering information after the accident, make sure to also document and photograph the passengers in the car
• Get the name, address & driver’s license number of all occupants
• If someone files a false claim for a nonexistent passenger, report the fraud; you’ll have documentation to support your case

Other Staged Accidents

• The drive down: When waiting to make a left turn, someone who has the right of way waves you into traffic and then rams into the side of your car, merging into traffic as you do
• The sideswipe: A driver intentionally rams your car if you drift into the outer lane when turning at an intersection from the inner lane of a two-lane zone
• The wave down: Two vehicles set up a crash with a victim who’s given a wave that it’s safe to pull out of a parking lot or side street
• Enhanced damages: In a legitimate accident, the not-at-fault driver causes additional damage to his or her own vehicle to pump up the claim
• Paper accident: An accident that only occurred on paper; the claims are usually made for property damage

If you get in an accident

• Gather as much evidence as possible right away
• Always call the police, regardless of who is at fault or amount of property damage
• Make sure official police report is filed, even if damage is negligible
• Take lots of pictures
• Get the contact information for any witnesses
• Immediately notify your insurance carrier

More Resources

Video illustrations of staged accidents

How to report suspected fraud

Accident and Fraud Prevention Checklist and Towing Information