Auto insurance fraud costs Americans billions of dollars each year, and the problem is only getting worse. In 2016, there were more than 1 million reports of auto insurance fraud, and that number is only going to increase as the economy continues to improve. Fraudsters are often able to get away with their crimes by using fake documents or by convincing people to sign up for insurance they don’t need.
What is auto insurance fraud?
Auto insurance fraud is a crime in which an individual or group of individuals deliberately files a false insurance claim. This can be done by making up an accident, damage, or injury. It can also involve selling or buying fake car insurance policies. Auto insurance fraud is a serious crime that costs the insurance industry billions of dollars every year. It also raises premiums for honest policyholders.
How does auto insurance fraud work?
This a problem that costs the average U.S. driver $400 a year in increased premiums, according to the National Insurance Crime Bureau. That’s because scammers stage accidents and file false claims, costing insurance companies millions of dollars each year.
One way scammers try to pull off this scheme is by working with accomplices who act as “witnesses” to the staged accident. The scammers might also use fake injuries or damage to their car in order to make the scam more believable.
Insurance companies have started using technology such as telematics – which monitors driving habits – to help them identify suspicious claims and prevent fraud. But even with these measures in place, auto insurance fraud remains a serious problem for drivers and insurers alike.
Who commits auto insurance fraud?
While this type of fraud is a crime that can be committed by anyone, there are some groups of people who are more likely to commit this type of fraud than others. Insurers have identified several key groups that are more likely to engage in fraud.
One group is the organized crime syndicate. These groups often have experience with committing crimes like auto insurance fraud and they have the resources to carry out complex schemes. They may also have connections to people in the insurance industry who can help them get away with their crimes.
Another group that is commonly associated with auto insurance fraud is people who are struggling financially. Some people may feel like they have no other choice but to commit fraud in order to get the money they need. Often, these individuals will make false claims about injuries or damage in order to receive a payout from the insurance agency.
How does auto insurance fraud impact consumers?
These activities drive up the cost of car insurance for everyone. This results in higher premiums for consumers and businesses. In some cases, auto insurance fraud can also lead to criminal charges being filed against the perpetrators.
The cost of auto insurance fraud to society
Auto insurance fraud is a serious issue that costs society billions of dollars every year. Fraudulent claims can drive up the cost of premiums for all policyholders, and they can also lead to increased taxes and higher insurance rates for businesses. In addition, auto insurance fraud can have a negative impact on the economy by reducing the amount of money that is available for legitimate claims.