We are all aware that there is a large amount of fraud that goes on with car insurance. Most of the time we aren’t really concerned that someone is ripping off an insurance company, after all, they are a huge company and can afford it right? While it is true that most insurance companies are multimillion dollar organizations, they do have a bottom line. Losses from fraud are ultimately passed on to all of us in the form of higher insurance costs. With that in mind, it might be interesting to see what some of the most common insurance fraud schemes involve.
Some people just dump, or destroy their car and then claim it was stolen. This is called “vehicle dumping”, or “owner give-up”. In some cases, the vehicles are sold to an unsuspecting victim and then reported stolen. This gives the scammer a double payoff.
Another common fraud is committed by crooked repair shops. Some less than upstanding repair shops have been known to use substandard, cheap and often used parts to make necessary repairs and then bill the insurance company for new parts. Not only is this practice illegal, it can also be unsafe for the car owner.
Also involving repair shops is the illegal practice of not replacing an airbag after an accident. Airbags are expensive to replace and some unscrupulous repair shops would rather pocket the airbag replacement cost and simply stuff other objects just to keep the sensors working. Again, very unsafe for the driver.
Not as dangerous, but still illegal is the practice that some people have of registering their vehicles in area where they do not live. Where you live affects what you pay for insurance, so some people register their vehicles in other states or counties to avoid higher premiums.
Fraud is always a problem for everyone. It can lead to unsafe conditions, and higher premiums for everyone.
