Types And Consequences Of Car Insurance Fraud
According to statistics, one out of every three injury claims as a result of an accident are actually fraudulent claims. In 2007 these fraudulent claims cost insurance companies anywhere from $4.8 billion to $6.8 billion. However, claiming false injuries as a result of an auto accident is not the only type of car insurance fraud plaguing society. Almost all forms of insurance scams will carry with them criminal charges if caught.
There are the false claims scams that people use to get money from insurance companies that are not rightfully owed to them. These false claims range from no existing or exaggerated bodily injuries to false accident claims. In a lot of situations with bodily injury claims as part of a scam, the person injured had actually staged a collision. In a staged collision, the fraudster deliberately causes an accident and then claims soft tissue damage that is hard to dispute, thus making the innocent party's insurance pay out money for medical bills and loss of wages. Drivers have also been known to try and claim that previous minor damage to a vehicle had actually occurred during a recent auto wreck. Thus making damage that was not previously covered now covered by the insurance company. For those with full coverage, another method of false claims is to report non-existent damages to a vehicle to the insurance company. This method is not as easily pulled off but does happen.
Giving false information to obtain a better car insurance policy with lower rates is also a form of car insurance fraud. This can take the form of lying about residence to get a lower rate for living at the false address. False information can also be in the form of not reporting all drivers in the household to keep from having higher rates. For example, if your spouse lives with you but his or her driving history will increase your rates, you must either exclude the individual or add him or her to the policy, if they live in the household. If you exclude the individual, then he or she cannot drive your vehicle. However, if you report that this person does not live in the household, then you can let the individual drive your vehicle without affecting your rates. While it seems harmless, it is still insurance fraud.
For those who are caught committing car insurance fraud, the penalties range from high fines to imprisonment. According to the Investigative Insurance Fraud Bureau, the fines are $7500 and imprisonment is 5 years. For those who are not caught, the consequences of insurance fraud are felt by the innocent drivers. The more an insurance company has to pay out in claims, the higher the insurance policy rates are for all drivers. Insurance companies are also getting tougher on paying out insurance claims, thus making it harder for innocent drivers to get the money they deserve from the insurance company.