6 shadiest auto insurance fraud schemes
Insurance fraud schemes
Even if you never find yourself in the middle of one of its sleazy scams, auto insurance fraud hits you. Industry experts say it slows legitimate insurance claims, increases premiums and, in some cases, puts innocent victims in danger.
Law enforcement officials say fraud factors into as many as 1 out of every 3 auto insurance claims in New York City. The problem may be even worse in Los Angeles, the city that generates the most questionable claims potentially linked to organized crime, according to the National Insurance Crime Bureau.
That trade group tracks fraud for insurers and ranks California, Florida, Texas, New York and Maryland as the top five states for fishy auto insurance claims.
The cost to motorists is tough to pin down because fraud often goes unreported, but it’s definitely a “major-league crime involving a wide variety of schemes,” says Jim Quiggle, a spokesman for the Coalition Against Insurance Fraud in Washington, D.C.
In New York City alone, officials estimate that fake auto claims add $241 million to premiums. Nationally, experts believe overall insurance fraud costs tens of billions of dollars every year.
Learn how to protect yourself as we uncover the worst auto insurance frauds.
Listen to audio
Auto insurance fraud slows legitimate claims, helps to raise rates and can even put you in danger. Watch out for fraudsters’ sleazy scams.
One scheme is to replace an air bag that deployed during a crash with a cheap knockoff, or even with nothing more than rags and trash.
Staged accidents are another major source of auto insurance fraud. One common crash con is the “swoop and squat,” in which two vehicles trap a victim in a rear-end collision. Beware of agent fraud, involving a dishonest agent who slips extra, unwanted coverage into your car policy to pocket a fatter commission.
There are also windshield replacement rip-offs. A stranger with a vehicle glass company talks you into getting a new windshield and later uses your insurance information to submit phony claims. And, towing scams involve “bandit” tow trucks that prowl for accidents and charge exorbitant rates.