Every year, insurance companies lose an estimate of $30 billion paying for car insurance fraud and other types of insurances. This is money paid by other premium members.
What’s even more painstaking is that these insurance companies do not pay this $30 billion insurance fraud costs from their pocket, instead, they distribute among consumers – including the innocent ones.
So, you see… Car insurance fraud doesn’t favour anyone, including those who are indulged in it.
In the past, we have talked about different types of insurance fraud in general and how to avoid them but in this article, we shall be focusing only on common car insurance fraud.
If you are an underwriter or you manage a car insurance company, you must devise a means to find and execute punishment on people who are indulged in this crime.
Auto insurance fraud is a punishable crime. You can help stop car insurance fraud by reporting it to State Department of Insurance and provide them with adequate details. Car insurance fraud investigators are trained to fish out even the most tiny insurance fraud.
3 Common Car Insurance Frauds
Car Insurance Fraud #1: Stolen Car
Car insurance fraud scam is prevalent nowadays. People can sell their car to an oversea buyer and declare it stolen so that their insurance company will pay for it.
Alternatively, they can split their car in parts and sell them off to car assembling plant and request that their insurance company pay for it. This is a very serious car insurance scam every insurance company must watch out for.
Car Insurance Fraud #2: Car Damage
No form of insurance fraud is good. They all have a damaging effect on the insurance company because it will make insurance holders to start leaving a company with speed.
This is how people defraud an insurance company with news of car damage. They collect money for a damaged car and never repairs it or they do it shabbily. Next time, they will make it worse than the former and still request for another payout.
Car Insurance Fraud #3: Car Accident
Whenever you see an accident in USA, especially those ones that could be avoided, you should watch out for a car insurance fraud scam in action. Ever seen someone consciously bash another’s car? It’s because they want to siphon money away from their insurance company.
Most times, the driver, bystanders and passengers can connive to perpetrate an insurance fraud. If you are running a car insurance company, make sure you sell car insurance policy only to people with good driving record.
Although there’s still a way you can get a good quote even with a spotty driving record but there’s no guarantee that every auto insurance company will let you have your way.
How to Stop Car Insurance Fraud
Did you know that some people go as far as faking death just to get a life insurance payout for their family when they go bankrupt? That sounds like the height of it. But we can stop it.
The process of stopping car insurance fraud in the United States is very simple. Gather your evidence, and report to the State Department of Insurance to begin investigation on it.
If you don’t, we will all suffer it because insurance companies will distribute it among their consumers, making us pay more than the usual.
Shun car insurance fraud. In subsequent articles, we will talk about penalties and consequences of auto insurance frauds.