Recap: Insurance Fraud 101
What is car insurance fraud? It’s any type of deception committed against an insurer for financial gain. Right now in all 50 states insurance fraud is illegal.
Car insurance fraud can happen in 5 ways
1. Owner give-up or automobile dumping
This fraud happens when the owner gets rid of their car by burning it, dumping it in a body of water, selling it, or just leaving it somewhere, and then claiming that their car was stolen.
Fraud is intended to pay out in 2 ways when someone’s car was sold before being reported stolen. That would be getting money from the sale of the car and also from the insurance settlement.
2. Registration of a car that’s not accurate
This scam is when people register their car in another county or state to get a lower insurance rate. It misleads the insurance company. Insurance rates can differ from one county to another in all states.
3. Inflated repair costs after an accident
This one happens with shady repair shops. Let’s say you have an accident. You take your car to a repair shop that uses cheap or used parts to make the necessary repairs. After, they bill your insurance company much higher costs for new parts. They’re committing fraud for a financial gain.
This can also be a big problem with body shops. The fraud committed is very similar to repair shops.
4. Airbag replacement that’s faulty
This is another type of car repair scam. It happens when mechanics don’t replace the airbag after an accident. Instead, they stuff the compartment with other objects, such as beer cans (yup, you read that right) or packing peanuts to keep the sensors working.
This is another repair scam that takes place often. It happens when mechanics never replace the airbag at all. Some repair shops have been caught stuffing the airbag compartment with beer cans or peanuts just to keep the sensors working, so they don’t get caught. Yes, you did read that right.
In California replacing an airbag with a fraudulent one can bring a $5,000 fine and up to a year in prison.
5. Faulty windshield replacement
This takes place when a non repair specialist approaches unsuspecting drivers. They claim they’re windshield repair specialists and try to convince the driver they need a new windshield. They say a new windshield is needed now or ASAP. They go to their truck or van and say they just so happen to have the exact windshield your car needs. They say everything is completely covered by the insurance company and nothing is paid out-of-pocket. The non repair specialists create a sense of urgency and you need to have the repair done now… right?
Wrong. This terrible scam can drive up your car insurance rates. It can also put you in danger. A factory windshield is being replaced with a bad one or one that’s not safe. Your insurance company may even drop you because of the scam.
Car insurance fraud is a serious and potentially dangerous criminal offense. If you suspect you’ve seen fraud, get in touch with your state’s Department of Insurance. If you believe you’re a victim contact them right away.
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