Car Insurance Scams | Insurance

By SusanTanner
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When you hear someone complaining about auto insurance ripoffs, they usually mean the high premiums that they have to pay every month, or the claim that didn't get paid. In reality, though, most insurance companies are reputable businesses. The scammers are most often the people who are buying the insurance, not the ones selling it. Surprised? You won't be after you read this.


How about someone conveniently making a claim just as a major part is about to wear out? For example, just as the car's engine hits the 150,000 mile mark, an accident occurs that requires the engine to be replaced.


Another would be someone who arranges an auto accident at pretty low speeds, but then scams their insurance company for thousands in medical bills and perhaps even a settlement in civil court because the damage in their back just won't allow them to ever work again.


Taking this a step further, the scammer may even bring a few friends along for the accident, and then claim that these passengers also suffered injuries. The friends settle for a goodly sum, and then give the primary culprit a percentage of their take.


Perhaps the most common auto insurance scam is the person who gets into a smaller accident, and because they want the parts replaced and not repaired, they inflict additional damage after the accident.


The last form of fraud we'll cover isn't perpetrated by the car owner, but the repair shop that works on their car. Unscrupulous repair shops will charge outrageous rates for their work. Their assumption is that since it isn't coming out of your pocket, you won't notice or care if they overcharge.


Insurance companies that provide auto coverage have a few defenses against scams. One is the use of deductables. Since the insurance holder has to pay out of pocket the full amount of the deductable before the company has to pay anything, this theoretically reduces the incentive to use insurance. Second, making a claim against your insurance can result in a significant increase in premiums, and this increase can be applied for years. Again, this discourages frivolous and fraudulent use. Finally, fraud is a criminal offense, and offenders can be prosecuted. Those convicted may face jail time.


There are so many ways to commit auto insurance fraud, though, it is almost inevitable that the rest of us will be stuck making up for a few dishonest scammers. Auto insurance companies factor fraud into every quote, which is a sad state of affairs, indeed.

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