Car insurance fraud

You might have heard of Car Insurance Fraud— this occurs when an insured individual lies and/or exaggerates an event in order to attain a payout (or an increased payout) from their insurance company. This also includes, but not limited to hiding key details of said events.

While Car Insurance Fraud may be shadowed by the headlines of outstanding current events, this is an issue that affects any wallet. Recent statistics state that 72% of alleged fraud victims say their auto insurance premiums increased as a result of reporting fraudulent activity. Premium increases are most likely to affect millennials, 78% of whom saw higher costs after being victims of fraud. (Coalition Against Insurance Fraud, CAIF). Nearly one-fifth of recent insureds have confessed to having lied to the insurers on their application.

There are two types of Car Insurance Fraud: Soft Insurance Fraud— which entails lying and exaggerating an event. For example, trying to deceive a dent on your vehicle for brushing a light-pole, and claiming it as a hit-and-run. This also includes covering priming information for an event. The second type of fraud is the Hard Insurance Fraud— where individuals (could be between family and friends) will go to the extent of faking a car accident in order to obtain larger-than-usual payout amounts, as well as abandoning a vehicle and claiming it as stolen.

The most common type of fraud are:

• Claiming damage to a vehicle and pocketing the money intended for repairs

• False garaging address to reduce premiums

• False number of drivers to reduce premiums

• Abandoning, selling, or hiding a vehicle and claiming it as lost

• Filing multiple claims for a single accident

The penalties for these types of frauds can vary among states, but they include large fines, increased premiums, and/or misdemeanors that could lead to jail time. Luckily, the best way of avoiding fraud is being honest and describing the series of events as transparently as possible.