Smart Auto Insurance Blog

Have you ever wondered how auto insurance companies recognize staged accidents and other fraudulent claims?  There are mechanisms in place with each insurer to limit fraud as much as possible and usually a whole department is dedicated to the efforts.  But there are some things you can watch out for to ensure you are not a victim of this crime.

The article “Staged Accidents And Scams: How to Spot Insurance Fraud” from The Car Connection website, says that stage accidents cost policyholders and insurance companies billions of dollars every year.  During the recession they’ve been increasingly popular according to the Insurance Information Institute (III).  Insurance fraud can take many forms from false claims, staged accidents, and huge fraud rings that stretch across the nation.

Some key warning signs that may indicate you are getting involved in insurance fraud include people who appear at the accident and insist you use certain lawyers and doctors, doctors who insist you file a personal injury claim even though you were not hurt, and when tow trucks appear without any calls being made.  Also, if after the accident you recognize other parties are inflating claims and misrepresenting facts you may be involved in someone participating in fraud.  It’s important to report any unusual activity to your insurer in hopes that they can get to the truth and not lose any more money on fraudulent claims.  It ends up costing everyone more money, not just the auto insurance company.

Auto insurance fraud continues to be a problem across the nation.  For years, auto insurance companies have worked to eliminate fraudulent claims and fraud rings.  Unfortunately, it’s still prevalent and costing consumers a lot of money.  Every time fraud is committed our premiums increase and this is not fair to the customers following the rules.

First Acceptance Insurance is working hard to limit the amount of fraud affecting their bottom line.  According to their website, they suspect fraud costs insurance companies and their customer billions of dollars.  The Coalition Against Insurance Fraud says that approximately $80 billion a year is lost because of fraudulent activity.  This is staggering and extremely frustrating to know it’s happening everywhere, all of the time.

The good news is that most auto insurance companies, including First Acceptance, have fraud departments in place, working around the clock to fight fraud.  First Acceptance, for example, has a specific team and information on their website to report fraud.  They also list information for the National Insurance Crime Bureau, who they work with, to combat this ongoing problem.  If you suspect insurance fraud, contact your insurer with information.  It may end up saving the rest of us a lot of money.

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 “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.