4 Types of Auto Insurance Fraud
Car insurance can be a great asset. It’s impossible to predict when and where a car accident will occur and a good insurance policy can bring peace of mind. Unfortunately, some people try to exploit the insurance system with auto insurance fraud. Not only is this illegal according to the Texas Penal Code, but insurance fraud can also raise premiums and costs for other people who never broke the law.
What is Auto Insurance Fraud?
Fraud cases come in all shapes and sizes. Auto insurance companies have become extremely skilled at detecting fraud attempts and many insurance firms employ a special investigations unit to catch fraudsters in the act. No matter how many times they fail, some insurance fraud schemes continually reappear. Here are four of the most common:
- Exaggerated Injury Claims: It’s no secret that car accidents can cause serious injuries. Medical bills associated with serious injuries can become extremely expensive and insurance companies may pay out big bucks for legitimate claims. However, if someone gets into a minor fender-bender, they may be tempted to exaggerate their injuries in hopes for a bigger insurance payout. This is a bad idea because insurers routinely investigate injury claims to check for anything suspicious.
- Claim Existing Car Damage: If someone has a few dents and scrapes on their car before they get into an accident, they may be tempted to include these defects in their accident report to get a bigger payout. This is also a bad plan because the special investigations teams at insurance firms have special techniques for determining the age and cause of car damage.
- Getting a Policy After the Fact: It’s surprisingly common for uninsured drivers to attempt to purchase coverage after an accident and then file a claim after the new policy has been instated. It’s extremely rare for this fraud to be successful simply because insurance companies have seen it attempted so many times.
- Get an Inflated Estimate: Another common trick is to bribe or persuade an auto repair shop to provide an artificially high repair cost estimate. Why is this a bad scheme? Because insurance companies have auto repair experts of their own.