Fraud in Vehicle Insurance
When you pay your monthly car insurance premium, you may wonder why its so high, and whether you’re being scammed. In fact, however, the culprits are usually the people with the insurance, and not the companies providing it. Want to know why? Here are some of the most common auto insurance ripoffs:
Sometimes people will use their insurance to get a new car when their old one is just about to give out. If the driver gets into an accident just as the engine hits 150,000 miles, for example, you’ve to wonder.
Some people will intentionally arrange to be in an accident. The crash is a low speed affair, but the driver claims that they’ve sustained major injuries and the insurance company has to pay out thousands in medical expenses. The scammer may even go so far as to claim that they have suffered a permanent disability that’ll keep them from ever working again.
There have even been reported cases where the person in the accident will tell their auto insurance that several other people were in the car and were also injured. Then the friends will settle for fees as well and give the insurance holder a percentage.
Probably the most common form of insurance fraud is inflicting additional damage after an accident. The owner, wanting parts to be fully replaced instead of just repaired, will intentionally cause irreparable harm to their own vehicle.
The last form of fraud we’ll cover isn’t perpetrated by the automobile owner, but the repair shop that works on their car. Unscrupulous repair shops will charge outrageous rates for their work. Their assumption is that since it isn’t coming out of your pocket, you won’t notice or care if they overcharge.
Insurance companies that provide auto coverage have a few defenses against scams. One is the use of deductables. Since the insurance holder has to pay out of pocket the full amount of the deductable before the company has to pay anything, this theoretically reduces the incentive to use insurance. Second, making a claim against your insurance can result in a significant increase in premiums, and this increase can be applied for years. Again, this discourages frivolous and fraudulent use. Finally, fraud is a criminal offense, and offenders can be prosecuted. Those convicted may face jail time.
Overall, the varieties of different frauds are overwhelming. I find it quite sad that because some people select to commit crimes such as these, your average person is the one paying higher rates and picking up the tab. It’s not fair that we have to pay for the people who abuse the system but other people’s fraud is factored into your auto insurance quote.
We do not live in a perfect world and the risk of fraud exists. It may be a fraud through a company offering you products, or it may be fraud through con artists, but the sad truth is it exists....
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