Crash for Cash: # Ways to Avoid Auto Insurance Fraud

There’s a reason people choose car insurance. In this world of constant accidents and damage that take a fortune to repair, car insurance protects you from expensive repair costs. In return, all the insurance company asks for is a lot of upfront money and then an expensive annual or monthly premium.

Since most people don’t want their car damaged, they never file a claim, but continue to pay the insurance premium. This is the reason why insurance fraud is a very common practice in the United States. Let’s see what it is and ways to avoid car insurance fraud.

Referring to the entity to which the fraud is committed, insurance fraud can have two meanings. There are insurance frauds that are committed against insurance companies by policyholders to make fraudulent claims and obtain money. The other type is made to customers either by shady companies or garages to extract more money. Both are dangerous, illegal and unethical.

Insurance fraud can be categorized into two groups; lies and crimes. Lies are “soft” fraud where the business or customer lies about certain situations to get lower rates (for customers) or charge more than normal (for businesses).

The crimes are “hard” fraud which directly consists of committing illegal activities to avoid paying or making a false claim by creating false scenarios (for customers) or defrauding customers or avoiding paying claims (for businesses).

Let’s look at these frauds in detail, starting with customer insurance frauds, committed by companies. It is very important for you as a customer to be aware of these scams and save yourself a lot of hassle and money.

There are so many ways and instances where people have been scammed for buying insurance policies. It’s either that the policy is useless and ineffective, or outright paying for a scam. Then there’s the most common price gouging to charge you more than normal. Here are some of the insurance frauds against customers.

False policies

The first thing to make sure is that they are buying car insurance policies from real companies and not from an “agent” or mediator who takes the money. Use the power of the internet and find the best and cheapest car insurer with legitimate examinations and operations.

Keep evidence

Always keep the premium payment receipt in a well-organized place. It’s also safe to pay digitally, by card or check. Whatever document you have from the insurance policy, always keep it in a safe place.

Never share private information

People have complained of receiving calls from numbers claiming to be from their insurance companies, asking for their personal information. Do not share any sensitive information with them and do not make any payments.

Fix Frauds

Many repair and modification shops will charge you extra for repairs, especially for people who don’t know the basics of cars very well. Always choose repair shops recommended by your car insurer, and always ask for an estimate before the repair so that prices are not inflated.

In an accident

If you are involved in an accident, the insurance company will seek all possible means to discredit the damage if there is no proof available. That’s why you should always make sure you have some. Immediately after the accident;

  • Make sure you’re okay
  • Call 911 immediately
  • If you can, take photos of the accident and damage
  • Write down the other car’s license plate and driver information
  • Avoid arguments with anyone, only talk to the cops and your insurance agent
  • Always have a dashcam to record the accident and have solid evidence

If you hurt yourself

Unfortunately, if you are injured in an accident and have personal injury protection coverage, or something similar, it is very important to proceed with caution to avoid a financial accident. Here are some things you can do to ensure fraud:

  • Seek medical help from a trusted, licensed medical professional
  • Carefully keep records of all treatments, appointments, etc.
  • Read your policy coverage and make sure what is covered by the policy and what is not.

Business Insurance Fraud

There are many frauds committed by customers against companies to make fraudulent claims. This is more common than you might think and very illegal. It’s a crime that can land someone in state prison for up to five years and a fine of around $50,000. These two reasons are enough to avoid committing such frauds.

Fraudulent claims

Many people create fake accident scenarios with an accomplice as the at-fault driver and a witness planted in hopes of getting a big collision claim. The insurance company will investigate fiercely and if caught, you could lose more than a damaged car. Do not try it because it is illegal in all states of the United States.

Vehicle discharge

When the car is old and almost broken, and someone has been paying the high insurance premium for years, they find that getting rid of the vehicle and filing an insurance claim to get a large sum of money is the best way to recover lost money. . This includes deliberately totaling the vehicle, burning it, dumping it somewhere, etc.

False information

Areas with higher vehicle theft rates have higher insurance rates. This is why many people give false information about the location of the garage to save on premiums. Sometimes people also inflate the cost of repairs to get more money from the company. Although these are only lies, they are punishable crimes. It is therefore better to avoid them.

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Justin D. O'Neill