Written by Samuel Rakestraw,  Insurance Analyst for Insurance Navy.

Con artists often frequent car insurance claims and cases because there are ways that are relatively easy for them to scam some money out of them. Lots of money is usually at stake when it comes to car insurance claims.

There are repairs and medical treatments that are usually left in the wake of a car accident and ensuing claim. There are ways that scammers can take advantage of these scenarios, so it helps to be aware of all the possible car insurance frauds and the damage they can cause. 

Types of car insurance fraud

On the surface level, there are two different types of car insurance fraud. Fraud is committed by the insurance company themselves and by the policyholder(s).

The goal of both is the same –to get more money than they actually are entitled to. Greed is often the cause of this crime.

How severe a case of car insurance fraud is determined in two ways. “Soft” car insurance fraud is used to describe falsehoods that were told by the company or policyholder. “Hard” car insurance fraud refers to fully-fledged illegal activities and operations that have been set up like creating false claim scenarios.

Car insurance frauds in action 

Let’s look at ways that car insurance frauds can be executed along with how to look out for them:

• Phoney insurance policies – There are scammers posing as insurance providers and agents. They will take your money and give you a fake policy. Always be sure to check where and who you are getting your car insurance. This is “hard” fraud.  
• Auto repair scams – Repair shops can also host a couple of scammers in their midst. These scammers will often inflate how much you have to pay in order to have your car repaired after an accident. It helps to get estimates of your repair job before enlisting any auto shop’s services. This is “soft” fraud. 
• Fraudulent insurance claims – This is a scam that the policyholder can be guilty of. There have been instances where they fake and even orchestrate accidents so they can receive a payout by filing a claim for the damages. This can result in prison for up to five years and up to $50 000 in fines. This is “hard” fraud. 
• Dumping a vehicle – When someone decides they want a new car, they go with this unethical route. They will either intentionally crash or total their car in order to file a claim and receive a payout. Some even dump their vehicles in a random place and declare them stolen. This is “hard” fraud. 
• Falsifying personal information – Car insurance is different for everyone because they are priced so differently based on the person. Scammers will try to use this to their advantage by giving false personal information in order to pay less for car insurance. This is “soft” fraud.    

Being vigilant about car insurance scams 

At the end of the day, you can prevent being involved in a car insurance scam by taking all the necessary precautions.

Remember to look at the reviews and reputation of all insurance providers before buying from them, along with being vigilant at auto repair shops if they aren’t recommended by your insurer.

Of course, you should always steer clear of illegal activity yourself.

[Image – Photo by Gareth Harrison on Unsplash]