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Why Auto Accident Fraud Occurs

Car accidents are often blamed on human error. However, not all auto accidents are caused by negligence; some accidents are, in fact, intentional or staged.

Auto accidents caused by intentional or premeditated acts are often committed by unscrupulous individuals to defraud insurance companies and collect money through bogus claims.

According to the National Insurance Crime Bureau (NICB), automobile accident fraud is considered as one of the most widespread and rampant fraud schemes in the country, which account for nearly 30,000 questionable claims related to auto accidents. Federal statistics further showed that 24 per cent of auto injury claims were fraudulent.

Federal agencies noted that auto accident frauds are prevalent in large urban areas or cities and in states with no-fault laws, where the incidence of car accident-related fraud is high. In no-fault states, parties involved in an accident normally submit physical injury and property damage claims to their insurance companies, regardless of fault.

Types of Auto Accident Fraud

The schemes involving auto accident fraud takes several forms. Here are three general types:

• Staged or planned Accident – It is an accident often orchestrated by parties involved who are willing participants in the act.
• Paper Accident – This is an accident that never actually happened and exists only in the files. In this type of accident, circumstances were falsified and the perpetrator claims payment for a pre-existing damage of the vehicle. In this scheme, the perpetrator drives a damaged vehicle in a public location and claims to be a victim of hit and run.
• Caused Accident – It is an accident planned by a group of persons on an unsuspecting victim, usually a female or elderly driver with insurance coverage. These accidents often occur in parking lots, intersections, and freeway ramps.

How it can Affect You

Aside from the property damage and the trouble that you have to undergo and suffer while injured, fraudulent car accident claims can have adverse effects on most car owners’ insurance coverage premium.

For instance, in Florida and New York where incidence of fraudulent auto accident claim is high, the insurance coverage premium of most car owners is higher compared to other places.

Auto accident insurance fraud is mostly responsible for the increase in the cost of insurance premiums in recent years. In fact, insurance scams have cost the industry about $30 billion in losses.

How to Avoid being a Victim

However, you can deter being used as victim in any these schemes. Here are preventive measures you can do in case you get involve in an accident:

• If you are not injured or disabled by the accident, notify the police at once
• Get a copy of the police accident report even if the damage is minor
• Always have a camera in your dashboard compartment to take pictures of the damage

In all cases, the information in the police report can help you identify the name and address of the other party involved, including the number of passengers and other information relevant to your insurance company. Without a police report, it will be difficult for criminals to file a false claim.