The average car owner knows nothing about auto insurance fraud, but it is essential to understand what it is, what to look out for, and what to do when you see it. Auto insurance fraud is something that is done to deceive and benefit financially from an auto insurance company. Some cases of fraud are much more severe than others, but rising instances of auto insurance fraud are driving up costs for legitimate auto insurance policy coverage nationwide. Experts estimate that as much as $40 billion each year is lost by insurance companies each year due to fraud. As a result, the average family will pay between $400-700 a year in extra premiums on their auto insurance quote to make up the difference.
Hard Fraud & Soft Fraud Cases
Industry lingo uses terms that the typical American may not be aware of, especially concerning local Fall River auto insurance. For example, the term “hard fraud” involves a scam that creates a fake situation in order to obtain insurance settlement. Individuals who are caught being involved in a hard fraud crime can face jail time and steep fines. Hard fraud is seen as more severe, as it is completely premeditated and fabricated. Like a common “con game,” hard fraud can involve a single individual or multiple players.
The most common type of auto insurance fraud seen by our insurance agency in Fall River and across the country is “soft fraud,” which can be more challenging to identify. The punishment for soft fraud is less severe than hard fraud, but fines, probation, and community service can still be part of the sentence if convicted. Soft fraud is most often seen through actions such as exaggerating an injury or damages incurred after an accident. Other types of soft fraud include providing misinformation to an insurer in order to gain financially from the situation.
Examples of Auto Insurance Fraud
If someone approaches you about an idea to commit insurance fraud, it is helpful to know what to look for in advance. Some people might think that these ideas and crimes are “victimless,” but the truth is that in the end, we all pay. If you ever have any questions about your Fall River auto insurance or if you get in an accident and someone makes a suggestion to you that just doesn’t sound right, contact your agent. Paul Sullivan Insurance Agency in Fall River is here to help.
- False Injuries – Following an accident, a person reports that they had injuries that never actually happened. They can make a claim against you as an individual to make you responsible for their medical bills. If you believe these injuries to be false, contact your insurance company right away.
- “Jump In” Injuries – This type of fraud is perpetrated by individuals who were not even in the car during an accident. They attempt to receive settlement funds by either the driver or the insurance company of the person that was involved.
- False Theft – Some owners abandon or will even set fire to their vehicle before reporting it stolen. In some cases, car owners have also hired professionals to dispose of their cars.
- “Padding” Claims – Instead of simply claiming injuries or damage that never occurred, this type of fraud involves “padding” or increasing actual damage by exaggerating the account in the claim report. Some car owners have even worked with medical doctors and mechanics to increase the severity of the injury to increase payments.
Another type of fraud involves misrepresentations that occur when insurance is purchased initially by the vehicle owner. Missing drivers, such as newly licensed teenagers or roommates who frequently use the vehicle, is a type of fraud. Under-reported mileage as part of a low-mileage savings program is another frequent type of theft. Lies about the location of the vehicle, such as claiming that it is garaged at one address, while it is actually parked on the street in a dangerous neighborhood every night.
Also, there are other scams, such as con artists who stage accidents to make claims against their own auto insurance policy or the person that they hit. Some will even work with fraudulent body shops to take advantage of insurance policies to pad charges, pay full price for used parts, or provide shoddy workmanship. There is even an airbag scam, which replaces airbags with aftermarket parts, but bills the insurance agency for an original equipment manufacturer (OEM) part.
Get a FREE Auto Insurance Quote
If you are in the market for quality Fall River auto insurance that you can trust, give us a call for a FREE auto insurance quote. At Paul Sullivan Insurance Agency in Fall River, we can review your current auto insurance policy and help you find the coverage that is right for you. Give us a call at 508-678-9611. If you are in an accident and suspect someone of insurance fraud, you can contact your agent or the state insurance department directly. It is important to work with an agency that you can trust. Our independent insurance agency has represented clients in Southeastern Massachusetts and Rhode Island since 1956.