Fraud Seriously Revving Up Insurance Prices

By Author: Norris Rios
Total Articles: 572
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Regardless of how you're covered, you want to pay as little as possible to keep your vehicle insured. Unfortunately, there are others whose actions can cause your premiums to go up, even if you never encounter them - those who commit insurance fraud. Whether it be staging accidents, selling you fake insurance, or overcharging you for repairs, insurance fraud is an unfortunate reality that we all need to combat in order to keep individual and collective costs down.
How Fraud Works

Those who commit insurance fraud are banking on the (generally correct) assumption that a staged accident - either between knowing participants or with an innocent bystander - will not be deeply investigated, so that they can collect insurance for a planned incident.

They may rear-end another driver, stop quickly to cause another driver to rear-end them, turn into your lane at an intersection with two turn lanes, or any other number of tricks. Then, they file a claim as they normally would, and either collect insurance money in a no-fault situation, or they'll try to get you to foot the bill!

What They Do: On the Road

Aside ...
... from the previously-mentioned tricks, there is one sophisticated ploy in particular to look out for:
The Swoop-And-Squat.

A driver in front of you stops short just after a driver to your right or left (their partner) cages you in so you cannot swerve out of the way. You are hopelessly trapped and must rely on stopping quickly enough to avoid hitting the car in front of you. They will hope that you will be following them just a little bit too closely, so you rear-end them.

What They Do: Off the Road

There is more to auto insurance fraud than purposely causing accidents. Oftentimes, con artists will approach people under the guise of selling car insurance, either door-to-door or over the phone. Occasionally, an auto repair shop will make unnecessary repairs to your vehicle, bumping up insurance costs and, consequently, premiums for everyone else.
How to Protect Yourself

To avoid becoming the victim of insurance fraud, it helps to know what to look out for, but the best thing you can do to avoid being personally hit by someone looking to make a fraudulent claim is to be alert and cautious while driving.

Be similarly cautious when you receive unsolicited insurance offers, and always make sure you visit reputable repair shops to repair a damaged vehicle. Consider getting a second opinion, and ask your insurance company about the repair shop if you're in doubt.

Unfortunately, the fact that insurance fraud happens is a systemic problem that you can't always directly affect, but by doing your part to minimize fraud, you can help to drive down rates for everyone.

If you have any evidence about car insurance fraud, contact the National Insurance Claims Bureau at www.nicb.org.

It may also be helpful to encourage insurance companies to spend more time investigating fraud. Make sure your insurance company is aware that you are concerned about fraud and, when comparing car insurance plans, look for companies that take fraud seriously, rather than simply pushing costs onto policyholders.