The best defense against becoming the victim of an auto insurance scam is to know how to spot them.
Insurance and law enforcement experts estimate that fraud may play a part in as many as one of every three car insurance claims. Auto insurance fraudsters pick the pockets of honest drivers like you through increased premium costs and more directly through out-of-pocket costs to cover deductibles.
Here are six of the most popular auto insurance scams to avoid:
Staged accidents
Con artists and scammers have been using several versions of fake accidents since before the dawn of cars to separate insurance companies and people from their money.
One form of this auto insurance scam is a forced rear-end collision where the scammer cuts you off and quickly jams on their brakes, causing you to rear-end them. Intersection drive downs occur when you and the scammer are at perpendicular points in an intersection. The con man will wave, appearing to give you the right of way and than lurch out in front of your car causing you to hit him.
How to protect yourself — Be alert and aware of your surroundings at all times. Exercise good defensive driving habits such as not tailgating.
After an accident, observe the other driver and passengers. Do they appear concerned or are they laughing and joking? Take pictures of their damage and of each of the passengers. Most importantly insist on having the police respond to the scene and get a copy of the police report.
Mystery victim auto insurance scam
Accident scenes can be confusing places. The combination of the shock of the accident and its immediate aftermath can leave you confused.
Scammers know this and count on it for the very profitable auto insurance scam known as the mystery victim. The scam takes place months after an accident happens when you are informed that a passenger in the other vehicle was injured. In reality they were not in the car at the time of the accident.
How to protect yourself — After all accidents, whether you suspect they were staged or not, count and identify all the passengers from the other car. If possible photograph everyone and get names, addresses and dates of birth. When the police arrive have them take note of the number of passengers in the vehicle and ask that it be noted in the police report.
Data mining auto insurance scam
Under normal circumstances you would not give a complete stranger your name, address and driver’s license number. But after an accident you would, without even thinking twice.
The most common form of this scam happens when you are involved in a minor of collision. The other driver insists that you exchange information, after which, he carefully inspects the damage to his car and says it’s not worth filing a claim. He climbs back into his car and drives off with more than enough information to steal your identity.
How to protect yourself — After all accidents and particularly in cases where you exchange information and the other driver says he doesn’t want to pursue a claim, immediately notify the police of the accident. Provide authorities with the other driver’s information as well as your own.
Ask the police to check if the driver’s license and registration are legitimate. Hold on to the information because it may be helpful if fraud occurs. Place fraud alerts on all of your credit and bank accounts. Monitor your accounts and your credit report regularly for at least one year.
Counterfeit airbags auto insurance scam
Airbags save thousands of lives every year and prevent serious injury in countless others. Even a minor collision can result in your car’s airbag being deployed, requiring professional replacement.
A small percentage of crooked repair shops will use cheap counterfeits as replacements rather than manufacturer supplied or authorized ones. There have even been reported cases of unscrupulous shops filling the airbag cavity with garbage, leaving unsuspecting owners at great risk in the event of an accident.
How to protect yourself — If your airbag needs to be replaced use a licensed, insurance company recommended shop or dealer. Insurance companies go to great lengths to ensure that the shops they authorize are honest.
When buying a used car insist on a vehicle history report so you can determine if the car has been in an accident. If it has, keep an eye on the dashboard airbag light. It should light up briefly when the car is started. If it flashes or remains on have the airbag checked immediately.
Windshield replacement auto insurance scam
You go into the supermarket to do your weekly grocery shopping and come out to find someone looking at a small crack in your windshield. He tells you that he saw some kids throwing rocks and one of them hit your window. Unfortunately the kids left with their parents before he could get their names.
A variation of this auto insurance scam has the same helpful stranger telling you that for technical reasons your windshield is no longer up to code and should be replaced. Fortunately for you he can have it replaced at no cost to you. The scammer may even offer to have someone come right down from the repair shop and complete the repair while you have lunch.
How to protect yourself — Never trust a stranger in a parking lot to repair your windshield or other window glass, even at their shop. Reputable auto glass companies are never out trolling parking lots looking for business. If your window is damaged go to a repair shop recommended by your insurance company and avoid this auto insurance scam.
Agent fraud auto insurance scam
Most insurance agents are honest business people who rely on you, as a satisfied customer, to refer friends and relatives. There are however a small handful that are not honest. They will use unethical and fraudulent methods to make a few extra dollars.
A common auto insurance scam is to quote you an especially low price with a top rated insurer. Often, the rate will be substantially less than any other you have received. Then a few months after signing the contract you receive a letter informing you of an error in your premium and your new rate is a few hundred dollars higher. The scammer counts on you being grateful for their effort to save you money and that you will just pay the difference.
How to protect yourself — If a deal sounds too good to be true, it probably is. There is no such thing as agent only or special rates just for agents. Check with the insurance company directly on the phone or online to see if you are offered the similar rate.
If you suspect agent fraud of any kind immediately contact the company that your insurance is with and inform them of your concerns. Contact your state’s insurance department or commissioner and file a formal complaint against the agent.
Do you know anyone who has been a victim of an insurance scam?
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