You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the technical advice and tools needed to succeed throughout animation ’ s fiscal journey. Bankrate ’ s editorial team writes on behalf of YOU – the proofreader. Our goal is to give you the best advice to help you make ache personal finance decisions. We follow hard-and-fast guidelines to ensure that our editorial capacity is not influenced by advertisers. Our column team receives no aim compensation from advertisers, and our message is thoroughly fact-checked to ensure accuracy. so, whether you ’ re reading an article or a review, you can trust that you ’ re getting credible and dependable data. We measure your trust. Our mission is to provide readers with accurate and indifferent data, and we have editorial standards in identify to ensure that happens. Our editors and reporters thoroughly fact-check column contented to ensure the information you ’ re read is accurate. We maintain a firewall between our advertisers and our column team. Our editorial team does not receive direct recompense from our advertisers. Bankrate follows a rigid editorial policy, so you can trust that we ’ rhenium putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the proper fiscal decisions. All providers discussed on our locate are vetted based on the value they provide. And we constantly review our criteria to ensure we ’ ra putting accuracy beginning. Our indemnity team is composed of agents, data analysts, and customers like you. They focus on the points consumers care about most — price, customer servicing, policy features and savings opportunities — so you can feel convinced about which provider is right for you. Bankrate follows a stern editorial policy, so you can trust that we ’ re putting your interests first. All of our contentedness is authored by highly stipulate professionals and reviewed by topic matter experts, who ensure everything we publish is objective, accurate and worthy of your trust. Founded in 1976, Bankrate has a long track record of helping people make smart fiscal choices. We ’ ve maintained this repute for over four decades by demystifying the fiscal decision-making march and giving people assurance in which actions to take future. While we adhere to strict column integrity, this post may contain references to products from our partners. here ‘s an explanation for how we make money. This message is powered by HomeInsurance.com ( NPN : 8781838 ). For more information, please see our Insurance disclosure. policy fraud costs the car insurers and consumers billions of dollars each year. Fraudulent claims spiked in 2020 due to an escalation in schemes during the pandemic. According to the Insurance Information Institute ( Triple-I ), the most common fraud schemes since COVID-19 began impacting the U.S. have included stage accidents, billing scams and even “ fake ” accidents occurring at homes of drivers. Whether the topic involves a consumer misrepresenting a claim or a retailer or service supplier misreporting products or labor, insurance fraud is considered a crime. And even without participating in the act, the cost of $ 29 billion per class — and sometimes more — to car insurers impacts millions of families across the U.S. Auto indemnity fraud accounts for up to 14 % of all car premiums across the country. Drivers in Florida and Michigan — two states that are good with car fraud schemes — may want to be particularly careful. Florida presently has the highest rate of car indemnity fraud in the U.S., according to the Insurance Research Council, and 83 % of Michigan ’ s policy imposter complaints were for car and no-fault benefits, leading to criminal investigations. According to Jim Quiggle, communications film director for the Coalition Against Insurance Fraud ( CAIF ), indemnity fraud is a “ major league crime involving a wide-eyed assortment of schemes. ” even as an everyday driver, it could help to know what it looks like .
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Types of car insurance fraud
Counterfeit airbags
between 2016 and 2017, frontal airbags are reported to have saved an average of 2,782 lives per year, according to the National Highway Traffic Safety Administration ( NHTSA ). however, during the animate work, at least a small percentage of those deployed airbags will be replaced with counterfeits — which can be dangerous. Although the NHTSA estimates that forge airbags represent less than 0.1 % of what is installed in U.S. vehicles, their high likelihood of malfunction, plosion and alloy shrapnel publish make them dangerous to drivers. The convenience of on-line patronize through sites like eBay has increased counterfeit airbag circulation. Additionally, some animate shops looking for ways to increase profits have been known to intentionally opt for cheaper airbag replacements, despite their facility being illegal in most states. The NHTSA is mindful of at least 21 fomite makes with counterfeit airbags available, including mid-range car manufacturers like Nissan and more high-end ones like Land Rover and BMW. “ Crooked repair shops frequently replace the bags with cheap knockoffs, or in some cases just fill the area with junk and drivel, ” says Quiggle. “ The insurance company pays for hypocrite make and the driver ends up with a car that isn ’ triiodothyronine condom. ” If you are buying a used car, there are several things you can do to help avoid having a counterfeit airbag installed in your vehicle .
- Get a vehicle report from Carfax or a similar vendor to see your car’s accident and service history.
- Check for the airbag light on your dashboard to briefly turn on when your car starts to show that it is functioning correctly.
- Get your vehicle inspected by your car’s manufacturer, especially if your airbags have been replaced in the past three years by a repair shop not associated with a new car dealership.
Staged accidents
The National Insurance Crime Bureau ( NICB ) referred to staged accidents as a “ boastfully commercial enterprise ” that drivers should know how to spot and handle. They include any incidents where a driver intentionally or strategically causes a collision with another vehicle to receive a deceitful indemnity payout. The incident ’ randomness facts are frequently high-flown or misrepresented to result in the unsuspecting driver being at blame.
Staged accident claims may result in claims ranging from $ 2,000- $ 10,000, but some imposter rings may work jointly to receive even more, resulting in hundreds of thousands of dollars in total. For policyholders in South Carolina, which ranked seventh in the nation for most denounce accidents, these schemes caused premium increases of around 8.9 % across 10 major providers in the submit. NICB says common types of staged crashes include :
- Swoop and squat: Two vehicles trap a victim in a rear-end collision.
- Drive down: When waiting to make a left turn, the victim is lured into turning early by an oncoming fraudster who waits and then proceeds to collide with the victim.
- Wave down: Two vehicles set up a crash with a victim who’s given a wave that it’s safe to pull out of a parking lot or side street.
- Enhanced damages: In a legitimate accident, the not-at-fault driver causes additional damage to their vehicle to pump up the claim.
- Panic stop: A vehicle intentionally watches for the car behind them to become distracted and then slams on their brakes, causing the tailing vehicle to rear-end them.
- Sideswipe: A driver positions themselves so they can sideswipe another car that is using the inner left-turn lane of a dual left-turn lane intersection.
If you always suspect you are separate of a spy accident, NICB recommends that you document the extent of damage and the number of passengers involved in case false claims are made. additionally, it is recommended that you be wary of individuals offering advice and services that were not requested, including post-accident medical advice and tow services .
Agent fraud
Most insurance professionals are honest, but if you buy your car insurance coverage through an agent who isn ’ deoxythymidine monophosphate on the up-and-up, it can cost you. CAIF says one of the worst-case scenarios involves a dishonest policy professional who steals your premiums. The unscrupulous agent pockets your money and doesn ’ triiodothyronine set up the coverage, therefore when an accident occurs, you find that you have no indemnity to pay your claim and must cover the passing on your own. To avoid bounty larceny, drivers should work with trust agents and always verify their coverage independently with the insurance company. Some ways you could go about finding a hope agent include :
- Request references: To get an idea of the agent’s professional reputation, you may ask for references to ensure that they have a proven track record.
- Verify the agent’s license: You can check an insurance agent’s license either by looking it up on your state’s license database or using the National Association of Insurance Commissioners’ (NAIC) Consumer Information Source.
- Compare advice: Like car insurance quotes, it could help receive coverage advice from more than one agent to see what they recommend. If an agent’s advice seems off-base from what you have heard from several others, you may want to consider whether they are providing you with reliable information.
- Research complaints: An insurance agent with substantial professional experience is likely to have information about their work history available. In doing your research, also consider if any complaints have been filed against them.
Another common practice is known as “ sliding, ” in which an unethical agent slips supernumerary coverage that you didn ’ triiodothyronine want into your policy. This particularly sneaky form of car insurance imposter can add a few hundred dollars a year to your premiums while padding the agent ’ mho commission. argus-eyed drivers who investigate their agents ahead of time and keep a near eye on what they ’ rhenium buy are less likely to fall victim to sliding scams .
Windshield replacement rip-offs
Most states require a deductible for windshield repair substitute but there is no deductible required in Florida, Kentucky and South Carolina. unscrupulous glass replacement contractors in these states have used this as an opportunity to trick customers into having their windshields replaced flush if minimal wrong is confront. This victimize is specially prevailing in Florida. Drivers are approached randomly at car washes, flatulence stations and shop centers and enticed with endowment cards to sign an Assignment of Benefits ( AOB ), allowing the shady seller to handle the repair and title procedure with the insurance company. many times, these fraudsters work with unscrupulous attorneys who file suit against the insurers in the name of the policyholder but without their cognition or accept. This can lead to six-figure settlements for a dim-witted windshield repair that should have lone price $ 200- $ 300. about 27,000 AOB windshield animate lawsuits were filed against Florida car insurers in 2020, according to the Florida Justice Reform Institute. According to Farmers Insurance, the windshield refilling propose is about always a victimize. And the risks may be more significant than many people realize. First, the quality of the refilling windshield and the repair workplace normally is subpar, which means you could be putting your safety at risk when driving your fomite. This scam can besides do a number on your insurance coverage, says Quiggle, as it could lead to increased rates or policy cancellation. Experts say the best thing is to walk away from the offer. If you need your windshield replaced, contact your indemnity agent or carrier and report the passing. They will verify coverage and arrange a legitimate seller, such as Safelite, to come to your home or business to repair or replace your windshield .
Towing scams
At beginning glance, a tow hand truck appearing after an accident or breakdown may seem like good luck. But if you did not call for a tow, there is a good chance it is what authorities call a “ bandit ” tow hand truck. A bandit tow service will probably request that your vehicle be brought to their workshop, where they will demand you pay them hundreds of dollars to repair and release the vehicle. You should be leery of any tow service that does not offer information about themselves, their services or how they were informed about your accident. There are respective easy ways to protect yourself against becoming a victim of these scams .
- Contact your insurer: If your car insurance company sent out the tow service, details are often provided, so you know who to expect. If the details provided do not match the tow service that showed up, consider calling the police or continuing to wait for the correct service.
- Request a printed receipt: It could pay to get a printed invoice upfront before letting a tow truck take your vehicle. The invoice should include itemized charges for the tow service, storage and any additional fees.
- Choose the destination: Although a tow service operating fraudulently will likely insist that your vehicle be towed to their shop, they should give you the option to have the vehicle towed to a destination of your choice.
- Avoid sharing insurance information: Sharing details about your auto policy with a fraudulent tow service may allow them to further take advantage of you and your policy.
Car insurance premium evasion
Policyholders are not always uninvolved when it comes to insurance scams. According to the Triple-I, some drivers measuredly mislead insurers by using a fake address from a lower-premium area when registering their vehicles. Another exemplify of car insurance fraud is measuredly failing to add a new driver in the family. For example, some policyholders may intentionally omit a driver, typically a adolescent, on the class policy to avoid increase rates. Insurance fraud costs the modal U.S. family between $ 400 to $ 700 per year in extra premiums, according to the Triple-I. Details regarding your personal information, vehicle information and drive history are much crucial to obtain an accurate premium and avoid violating any laws. This includes your ZIP code, fomite registration and anterior accidents .
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How to avoid car insurance fraud
Knowing that car indemnity fraud exists is the first footstep. To protect yourself, it is beneficial to know some extra ways to avoid these scams :
- Opt for original manufacturing parts when getting your vehicle repaired to avoid counterfeit or cheap replacements.
- Document all incidents, including accident damage, police reports and invoices. This could help in fighting future claim disputes.
- If something seems suspicious, consider calling the police. For example, an individual who does not provide much information about themselves but expects personal, insurance or payment information from you could be cause for concern.
- Keep your vehicle insurance information private. Outside of dealing directly with your insurer or handling official claims or reports, you might want to consider being wary of any other parties requesting information about your policy.
Frequently asked questions
What happens if you lie on an insurance application?
measuredly lying on an policy lotion is a form of fraud and is penal by fines and possible imprison fourth dimension. At the very least, your insurance company may increase your rates and impose a fiscal penalty of their own or even discontinue your coverage.
Read more: The 7 Best Car Insurance Companies (2022)
How much jail time can you get for insurance fraud?
The sum of jail time depends on the austereness of the fraud. For a misdemeanor fraud, you could get up to a $ 15,000 finely and a utmost five years in imprison. For a felony imposter, you could get up to a $ 150,000 fine and a much as ten-spot or more years in prison .
How do I report suspected car insurance fraud?
If you suspect car indemnity fraud, you may consider reporting it to your insurance company, american samoa well as the National Insurance Crime Bureau at 800-835-6422. Depending on how promptly you need aid, like in the case of a staged accident, you should immediately call the local or state police .
How can I recognize car insurance fraud?
policy imposter can take on many forms, from misrepresenting personal details on indemnity applications to strategically planned schemes, such as denounce accidents. Our tips on how to avoid car indemnity imposter above may be a useful starting point .