Smart Auto Insurance Blog

Bristol West Auto Insurance, along with many other auto insurance companies are getting hit with fraudulent claims.  According to the article “Report: Staged Car Wrecks On the Rise” by James Hart on blogs.kansascity.com, there has been a 40% jump in car accidents since 2007 staged on purpose with the sole purpose of ripping off insurers like Bristol West.  This statistic comes from a report from The National Crime Insurance Bureau.

Many of the fraud accidents are committed by all knowing parties, but sometimes the perpetrators target innocent drivers.  To avoid becoming a target, follow these simple tips:

• Avoid tailgating
• Always call the police immediately if you are involved in an accident
• Use your phone camera to document any damage as soon as it happens
• Never admit fault

Protecting yourself on the road is very important and knowing this type of fraud is going on can help you be more prepared if you are involved in an accident.  Avoiding the accident altogether is obviously ideal so your car insurance quotes are not affected.

According to the article “New York No-Fault Auto Insurance Leads to Inflated Claims” by Ryan Fields on e-wisdom.com, New York auto insurance could be experiencing higher rates because of their insurance model.  New York is one of many states in the US using the no-fault auto insurance system.  The purpose of this type in insurance model is to reduce costly legal costs from deciding who is at-fault for an accident.

Since no-fault auto insurance has auto insurance companies paying out claims directly to their customers regardless of fault, fraud can be an issue.  According to the Insurance Information Institute, about 20% of each no-fault auto insurance claims made are fraudulent.  That adds up to approximately $1561 per claim and cost insurers and their customers over $600 million since 2005.

Chief economist, Dr. Steven Weisbard, ties the increase to medical providers who submit claims that are much higher than they should be.  He says the amount of fraud in New York’s auto insurance system is so severe that payouts for claims are currently the 2nd highest they have been since the late 1990’s.  This excess translates to higher auto insurance rates for drivers in New York obtaining auto insurance.  Costs rise for everyone as fraud claims rise.

Auto insurance companies are getting more and more strict with paying out claims as the recession is forcing consumers to request more money to cover damages.  This is according to the article “Under-Insurance Hitting Thin Wallets” by Roeland Van Der Bergh on stuff.co.nz.

Another downside to this economy from the viewpoint of the auto insurance company is the rising rates of insurance fraud according to the article “Recession is Fueling a Boom in Insurance Fraud” found on the Times Dispatch website.  This increase in fraud is keeping state regulators and law enforcement very busy across the nation.

A recent survey conducted by the Coalition Against Insurance Fraud of 37 state insurance fraud bureaus found that the down economy has had a significant effect on the amount of fraud.  The bureaus reported an increase in fraud referrals and new investigations in all 15 categories of fraud covered in the survey.  Other tough financial times such as the influx in gas prices a few years ago.  As gas prices went up, so did the number of automobile fraud cases where people fraudulently reported their cars as stolen, or destroyed just to get the insurance payout from the auto insurance company.  People will do extreme things when faced with financial adversity.

According to the article “Pennsylvania Attorney General Charges 24 People With Auto Insurance Fraud” by Mark Mendell on topnews.in, 17 New Yorkers and 6 New Jersey residents claimed to be PA residents to obtain lower auto insurance rates.

This is a very serious offense and is definitely classified as insurance fraud.  Pennsylvania Attorney General, Tom Corbett, said the rate manipulation leads to $12-$15 million in claims on PA policies that affects the auto insurance rates of all the other drivers in the state.

Pennsylvania auto insurance quotes are significantly lower than rates in NY and NJ so it’s no surprise people would try to cheat the system to save a lot of money.  PA officials are taking this fraud very seriously.  The PA Attorney General spokesperson, Nils Fredericksen, says that the 24 defendant each face up to 7 years in jail and $15,000 in fines.

The state of California has seen suspected California auto insurance theft and arson fraud increase over the past year according to The California Department of Auto Insurance which released information on Friday.  This was found in the article “State Sees Rise In Suspicious Auto Insurance Claims” on Sacramento Biz Journal by Kelly Johnson.

The agency recently gathered data that showed criminals may be committing more auto insurance fraud to obtain insurance cash during these tough times.  Insurance Commissioner Steve Poizner stated in a news release that fraud is on the rise.  In 2008, the California Department of Insurance found a 25% increase in suspected car arson fraud cases from the year before.  They also received about 200 more suspected car theft fraud cases in 2008 compared to 2007. 

The department receives regular referrals of suspected fraud from auto insurance companies, law enforcement agencies as well as consumers and each case is researched to determine if it is actually a fraud situation.  Other kinds of auto fraud such as inflated damages, vandalism, and hit and run accidents have remained somewhat constant since 2007 according to the Department. 

This increase in suspected fraud may continue as the recession remains.  Consumers are feeling strapped for cash and desperate and this seems like the only road for many.  Of course, any type of fraud will end up costing you much more in the end, including possible jail time.

According to the article “NICB: Suspicious insurance claims up” by Susan R. Miller found on bizjournals.com, the number of questionable insurance claims increased to 41,619 in the first half of 2009, up from 36,743, in the first half of 2008. 

NICB member insurance companies refer these claims to the Des Plaines, IL based bureau for investigation based on certain indicators of fraudulent activity.  The report does not determine how many of these referrals end up being true fraud.  It also does not look at causal factors.  It’s only looking at raw data. 

Suspicious auto insurance claims increased by 21% in the first half of 2009.  Auto glass fraud is the number one type.  Suspicious car theft claims were 6,852, up 10% from 6,216 in the first half of 2008.

The high Michigan auto insurance quotes in Detroit and other Michigan cities are driving residents out as more and more people cannot afford the high costs.  It’s also causing thousands of residents to commit fraud or drop their insurance altogether.  This is according to the article “Car insurance rate setting hits Detroiters unfairly” by Jeff Gerritt on freep.com. 

Detroit is the nation’s poorest big city yet residents pay the highest average auto insurance rates in the country.  About half of its motorists go without insurance because it’s so expensive.  Part of the reason for this problem is what’s called territorial ratings, which allow auto insurance companies to base their prices in part where people reside.  Regardless of a person’s driving record, if they live in Detroit they will pay more for auto insurance.  Insurers state the reason for doing so is because these areas have been deemed higher risk. 

Since many are unable to afford their auto insurance costs, schemes are on the rise.  Some drivers buy fake insurance certificates for as little as $50.  Some use false suburban addresses when purchasing their policy to obtain a lower quote.

According to the article “Insurance Fraud Costs All of Us Money” by Jeanette Krebs on Pennlive.com, 7 out of 10 Pennsylvania drivers say they would not attempt insurance fraud.  That leaves about 2.5 million people who may consider fraud.  The same group of polled people believe that those who commit auto insurance fraud are rarely caught. 

Getting Pennsylvania auto insurance quotes already includes many factors most of which are based on individual information.  But the economy, business stability and fraud losses are all considered when auto insurance rates are determined.  This is why insurance fraud ends up costing all drivers on some level.  The worst part is that it is extremely difficult to catch these perpetrators.  According to the Franklin and Marshall University Poll about a quarter of respondents stated they would not report someone they knew involved in an insurance scam. 

In 1994 the fraud prevention authority was created as a funding mechanism, making funds available to law enforcement and prosecutors to manage insurance fraud.  The budget is approximately $11.6 billion which comes from insurance companies within the state.  Part of the money is also used to educate Pennsylvanians about fraud, such as TV ads letting people know they can go to jail for engaging in insurance fraud.

According to the article “Auto Insurance fraud cases surge, commissioner says” on myvalleynews.com, cases of suspected California auto insurance fraud has increased significantly over the past year.  State Insurance Commissioner Steve Poizner discussed the surge during an appearance in San Diego on Tuesday. 

It is suspected that the economic downturn is causing the increase in fraudulent behavior, but Poizner reminds Californians that breaking the law will only compound financial problems.  The state Department of Insurance estimates that fraud claims are up by 25% from 2007 to 2008.  The agency also received 200 more notices about possible auto theft fraud in 2008. 

Poizner advised that state insurance fraud investigators are hard at work to crack down on anyone attempting auto insurance fraud.  Not only does this behavior mean problems for the perpetrator but it also ultimately raises everyone’s auto insurance rates.

According to the article “Massachusetts Police Arrest 13 in Auto Insurance Fraud Case” from Claimsjournal.com, 13 people from Lawrence and Methuen have been charged with auto insurance fraud.  This is in connection to what police believe to be a staged accident where over $76,000 was paid out.

Lawrence Chief John Romero told The Eagle-Tribune that it is the largest group of people charged in connection with one incident since they started focusing on auto insurance fraud 6 years ago.  This crackdown was prompted by the death of a great-grandmother in a staged crash in 2003.

Ten of the thirteen charged say they were in a van that was hit on a ramp  in North Andover in May ‘03. The runner who allegedly set up the incident and the driver of another vehicle that hit the auto were charged as well.  It’s this kind of illegal behavior that ends up affecting everyone’s auto insurance rates.