Getting into a car accident comes with a long list of concerns and worries, from the possible injuries and damaged car to the auto insurance claim. Add to that the possibility the accident was premeditated from people that want to lure innocent law-abiding drivers into an auto insurance scam and get paid money they don’t deserve. Unfortunately, statistics show that insurance scams, and fraud in general, is the most troublesome financial crime in the country, after tax evasion. In fact, experts reveal that a total of 10% of auto damage claims and a striking 20% of bodily injury claims related to vehicle accidents are fake.
Higher premiums, lots of legal issues, and a blemished driving record is what drivers who fall victim of auto insurance scams are up against. Insurance companies, on the other hand, are called to pay out astronomical sums each year to settle claims that are just not real. For the criminal minds behind auto insurance frauds, this is a great cash source that is difficult to ignore. And, all that ends up in an extra couple of hundreds of dollars on people’s insurance policies.
Below, are the 5 most common auto insurance scams, as well as some practical ways to go through them without a scratch.
Scam#1: The “Friendly” Driver
This is a situation where a friendly driver who has the right of way waves you into traffic. Within seconds, you find out that they are not as friendly as they appeared as the driver will dart to the side of your car and merge into traffic at the exact time you do. Then, they will deny that they had given you permission, which will automatically leave you liable.
A variation of this scam can happen when you are competing with another vehicle for a parking space. In our case, the other vehicle belongs to the scammer, who will make sure this whole thing ends with a collision that (guess what?) leaves you liable again; plus, an insurance claim. As you can understand, the best way to stay on the safe side is to always follow right of way procedures, stay inside your lane, be alert, and keep your eyes open for possible dangers.
Scam#2: The “Helping” Hand
Let’s suppose that you were not able to avoid an accident and that you are now standing by the side of the road, waiting for the police and a tow truck to arrive. Then, a good Samaritan approaches, claiming to be a 3rd party insurance consultant or insurance expert and tries to convince you to use the services of a particular lawyer or health clinic, or a particular body shop, for your injuries; all fraudulent, of course. The idea behind this effort is to get your personal information so as to file phony or false insurance claims and earn a huge amount of money (or take a hefty cut). How did they find out about your accident? Probably got a tip from an unlawful mechanic or tow truck driver.
So, refrain from revealing personal information and details to any 3rd parties, and never ever conduct business with anyone else other than your insurance company and the other driver’s insurance company.
Scam#3: The Driver With the Phantom Pain
A fake injury claim is the purpose of this type of auto insurance scam. The other driver reports injuries or a back pain and seeks hospitalization. To cover the (fake) expense, they file an insurance claim with your insurance company. And, since claiming to have back pains or whiplash is nearly impossible to display on an x-ray, criminals usually pay off shady physical therapists, chiropractors, and doctors to confirm their alleged health issues and injury reports. The goal is to get a hefty payout from insurance companies.
A good way to spot imposters is to pay close attention to how they behave. If they appear to be fine after the accident and suddenly start putting on a show that involves lots of moaning when the police arrive, you are dealing with a scammer. The best way to avoid this scam is to file a police report, no matter how minor the accident may be. Obviously, it will be very difficult for an insurance company to believe that minor damages and scratches (according to the official record) can lead to the significant injuries the other driver claims to have suffered.
Scam #4: The Phantom Victim
This is a scam where people in the car you collided with file a personal injury claim with your insurance company. What the scammer is trying to do in this case is to file insurance claims for additional passengers in the vehicle and claim injury or pain. Most of the times, these passengers are not even present at the time of the accident. The accident could be staged or the criminal can use your accident to get money from personal injury insurance claims.
The truth is that you won’t be able to prevent this scam, unless you are willing to become the shadow of the other driver and follow them around all the times for months. However, you can take precaution measures. In case of an accident, make sure you also count the number of passengers (if any) in the other vehicle and take pictures of the general scene, the other car, and its passengers. If you feel that something is fishy, report it to the State Insurance Fraud Bureau.
Scam#5: The Crash for Cash
We left the most dangerous and most common auto insurance scam for last. It is a staged rear-ending accident, where the criminal comes to a stop in an on-ramp or busy traffic (or slows their vehicle down without a reason) and causes the victim-driver behind to crash into them. In this case, the rear driver (you) is to blame for such accident and you won’t find a jurisdiction to back you up easily. On top of the collision claim, the scammer may also claim to have back or neck pain and file an injury claim too.
Something as simple as keeping your distance from other vehicles on front of you, allowing them enough room to stop abruptly if necessary can save you from getting into a lot of unnecessary trouble.