Car Insurance Scams Cost Us All

An illegal activity almost as old as the concept of insurance itself is the insurance scam. There is no type of insurance that is safe from some form of dishonest claim filing by perpetrators looking to cash in and make a quick dollar, and car insurance scams are perhaps the worst kind, since they almost all involve setting someone up for an actual road accident, putting the con artist, the victim, and the general public at risk for injury in the event that the scam goes awry. It is estimated that automobile insurance scams cost insurance companies upwards of a million dollars a year in the United States alone.

You may wonder why this even concerns you. Insurance companies are major corporations with lots of money to throw around, right? Well, you should care. Those million annual dollars don’t really cost the insurance company – they cost you. The insurers pass those costs along to their customers in the form of higher premiums. We all pay so that the con artists can benefit.

There are a number of car insurance scams that happen every day in this country. All but one of them causes dangerous situations on the road and all of them cost insurance customers money. Some of the scams that affect insurance companies widely are detailed below:

The "Paper Accident"

The only common insurance scam that doesn’t involve an actual collision is also the most difficult to perpetrate because it requires the involvement of other parties. The criminal will report a completely fabricated accident to his insurance company and will obtain collaboration of the claim from false witnesses and business owners (salvage yards, auto repair services and such). These claims are typically kept below $1000.00 because most insurance companies will not investigate claims for anything under that amount. False hit-and-run reports are common in this type of scam.

The "Swoop & Squat"

You may recognize this scam from a recent series of television spots featuring actor Dennis Haysbert. This scam involves perpetrators in two vehicles. One will swoop in front of your car and stop abruptly; the other has already aligned his car with yours on the right, effectively boxing you in. You can’t swerve to the right due to the other car and there’s no way to stop your car in time. You rear-end the car ahead of you. The best lesson learned from this type of scam is probably that you should never tailgate.

The "T-Bone"

This is accomplished by simply waiting at an intersection and then ramming into a car as it passes. Phony witnesses suddenly appear and tell the police that the victim’s car did not obey a traffic light or stop sign.

There are numerous other scams against insurance companies happening every day and new ones are constantly invented. Besides the cost of the scams themselves, consumers are also paying the costs of the insurance companies’ prevention and investigation efforts. Scams like these are dangerous and costly. If you believe that you may have fallen victim to one of these insurance scams, the best thing to do is contact your insurance company, as well as the authorities