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Auto insurance fraud involves false claims for more money than entitled, including staged accidents or inflated bills. Insurance companies may also deny deserving claims. One in three auto insurance claims is fraudulent, with various types of scams, including staged accidents, side theft, and panic stops. Fraud can also occur through bad-faith insurance or cardholder-based fraud. Asset Smart.
Auto insurance fraud is a method by which an individual or insurance company claims more money than they are entitled to. Auto insurance fraud can involve a staged car accident or an actual accident with bills that conceal false claims or that the costs are higher than they really are. Insurance companies can also participate in insurance fraud by denying victims deserving claims and benefits. One out of every three auto insurance claims is fraudulent.
When a car accident is arranged as a way to commit auto insurance fraud, the driver usually takes out an insurance policy that covers the damage from the accident. The driver then sets up an accident to collect more money than he or she deserves. One type of car accident stunt is called a stunt and squat, in which two vehicles work together against the victim. One vehicle is known as the squatting vehicle and it stands in front of the victim, while the emergency vehicle cuts across the squatting vehicle, causing the victim to come to a sudden stop, who collides with the squatting vehicle. The swoop vehicle flees the scene, leaving the victim liable for damage and injury.
Another type of car insurance fraud fraud is a side theft, which usually occurs at an intersection. The driver who committed car accident fraud places a vehicle in the leftmost turning lane and the victim is hit by that driver. This type of accident is mainly corroborated by word of mouth, and the victim is usually responsible for the consequences of the accident.
Finally, a third car accident scam is the panic stop, which involves a passenger vehicle driving in front of the victim. When the victim is distracted, such as checking the rearview mirror or changing the radio station, one of the passengers in the car ahead signals the driver, who has slammed on the brakes, causing an accident in the rear. The victim will be blamed because his eyes were off the road.
If an accident does not occur, auto insurance fraud can occur through cardholder-based fraud or bad-faith insurance. Examples of holder-based fraud include totaling a car worthless and later claiming it was valuable and pretending to be injured in an accident. Bad faith insurance fraud is one where legitimate auto insurance claims are denied by the insurance company for a meaningless cause not stated in the policy. This type of car insurance fraud also works when the insurance company simply refuses to process the claim. The policyholder can appeal any denied claim, provided he has reason to do so.
Asset Smart.
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