General Auto Insurance Information

Auto Insurance Scams to Look Out For


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For the most part, people will seldom come into contact with attempted insurance fraud but all it takes is one bad experience to sully your car insurance history. The good news is that you can inform yourself of the possible types of insurance fraud and take the necessary steps to counteract it.

This list covers a good portion of the auto insurance scams perpetrated today. As people and authorities catch on, criminals undoubtedly develop new ways to game the system. Being a victim of auto insurance fraud not only stains your driving record but raises the rates for everyone else also.

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Swoop and Squat

This type of insurance scam involves two perpetrators each driving a car. It relies on the law that states a driver who rear ends another is always at fault in an accident. The driver of the squat car merges into a lane in front of the would-be victim. A victim is chosen based on how close they drive behind another car. The other car then “swoops” in, pulling suddenly in front of the squat car. Of course, both cars are in on the scam. The squat car is forced to stop quickly, at which point it is rear ended by the victim. The victim is to blame, the swoop car is long gone, and the scammers collect the insurance.

Phantom Vehicles & VIN Scams

A phantom vehicle is one that does not exist. A fake title and registration is created for which an insurance policy is secured. Miraculously the car is reported stolen after the insurance is purchased and a theft claim is made. This fraudulent scheme is usually done with cars that are more expensive as they produce a larger settlement claim for the scammer.

VIN scams are complex schemes that usually involve a great many cars such as a cab fleet. VIN numbers are switched from newer cars onto older ones. This allows the older cars to be overvalued and the owner of the cars to skirt laws that require them to purchase modern vehicles.

Auto Glass Scams

Often you will see booths set up at various locations advertising complete windshield repair on vehicles for owners who hold full insurance. This scam involves windshield being replaced unnecessarily and scammers billing insurance companies for features never installed. The scammer gets the driver to agree to a windshield replacement then contracts a company to do the job for less than the insurance pays out, and they pocket the difference.

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Fraud Arson

This is an old trick where the scammer sets fire to their car to disguise it and claims it has been stolen in order to collect on the payout.

Hit and Run Scam

This works by a scammer claiming that the damage done to their car was the result of a hit-and-run. There is no injuring party or evidence other than the word of the claimant.

Sideswipe Scam

In intersections with two left-turn lanes, this scam works when the victim unwittingly drifts into the other turn lane in the middle of the intersection–or not. The scammer might do the drifting. Either way, it is one person’s word against the others after the sideswipe occurs.

Wave-In

In heavy traffic, a courteous driver might wave you in to allow you to merge. A scammer will do this then accelerate and run into your car, claiming to the police and insurance company that they never waved you in.

Owner Give-Ups

An owner give-up is a practice whereby a car owner simply “gives up” their vehicle by abandoning it. The fraudulent aspect of this practice is that the vehicle owner arranges for the car to be “stolen” then files a claim regarding the theft.

The lure of breeching a car payment and receiving the replacement value for the car is enticing to some car owners. The problem with this scheme when uncovered, results in a felony indictment against the perpetrator.

30-Day Specials

A 30-day special involves a deal where the owner of the car reports it has been stolen while in a service shop for repairs. A fraudulent theft claim is made with the insurance company and the claim is settled. As the claim settlement concludes within 30 days, the vehicle is found abandoned.

Export Fraud

A new car is purchased by an owner and an insurance policy is bought. The car is immediately reported stolen as soon as the policy becomes effective. In reality, the car is shipped overseas, where it is sold on the black market for a profit. The new car owner receives the proceeds from the fraudulent insurance claim and the profits from the black market sale of the car overseas.

Each of these scams affects not only the insurance companies that pay the claims but all persons insured. The result of these schemes is higher premium rates, particularly for luxury vehicles and those most prone to false theft claims. Reducing common fraudulent insurance claims helps to hold down claims expenses and lower the cost of coverage for all motorists.

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