Car Insurance Fraud

As of last year, insurance fraud is the most prevalent form of fraud in the world. Of all insurance fraud, car insurance takes the lead with the highest incidents of fraud. Cars are some of the most expensive investments that a person will buy and the temptation to “cash-out” a policy can sometimes eclipse a person’s better judgment. The most common illegal methods used comprise of standard insurance fraud and car theft fraud.

When looking at insurance fraud it can be categorized into two main types, soft insurance fraud and hard insurance fraud. Soft insurance fraud involves cheating the insurance company on paper. The most common form is when you over state items that you have lost due to a theft. It may also involve overstating the amount of injuries that you have sustained or lying about the amount of pain that you have suffered. In the most basic form it is filling up the insurance claims form with details that aren’t reflective of the true nature of the accident. It doesn’t involve staging or planning for the accident to take place.

Hard insurance fraud is comparatively much more serious. It involves staging and premeditated planning of the accident to take place.  This means that you must have planned the fraud and have taken steps to see it through. The most common type of fraud will be to burn the car or to vandalize your own car then claim that it was done by some random people.

Claiming for medical expenses that have no relation to your accident also falls under the category of hard insurance fraud. An example of this is claiming that your persistent headaches are caused by some sort of whiplash that is associated with the accident when in actual fact it is caused by something else. It also involves claimants that file for claims that have no relation with the accident. An example of this is claiming that the existing damage on your vehicle is caused by the accident that you have had recently.

This is also where many people will engage in identity fraud by using the wrong registration places to get lower insurance premiums then later claiming that it is legitimate. It also involves drivers not reporting the right person behind the wheel at the time of the accident. This could be your father taking the blame for you, it is still considered insurance fraud in the eyes of the law.

Another form of fraud that happens regularly in the car industry is car theft fraud. A perfect example of this is to “sell” your car to the thieves’ then claim that it was lost to get the insurance company to pay for the car. This is by far the most common type of hard insurance fraud. The unfortunate fact is that it is extremely hard to prove and most of the time insurance claims are paid out because there isn’t enough evidence to proof that fraud actually took place.

Insurance fraud by individuals pales in comparison to insurance fraud that is conducted by crime rings. Some of these crime rings are international and will steal cars from one country to be exported to another country. One of the favorite techniques employed is to use the form companies and use bank funds to purchase vehicles. The cars are then reported stolen, exported to another country and re-sold as second hand vehicles or even reconditioned vehicles.