Common Types of Car Insurance Fraud

Auto insurance premiums can get very high, leading some motorists to try to find ways to lower their rates. While it may seem reasonable, it is a type of auto insurance scam to cheat yourself at lower rates.

In fact, there are several common types of auto insurance fraud that drivers are trying to commit. Insurance companies are looking for these methods and will do everything possible to prevent fraud.

Learn about the most common types of auto insurance fraud and how you can avoid the hassle of accidental fraud today.

What is insurance fraud?

Insurance fraud occurs when a person cheats on an insurance company in order to obtain some kind of benefit. They can try paying lower rates or they can try to get payouts for incidents that they shouldn’t get paid for.

In addition to auto insurance fraud, fraudulent claims are also observed in home insurance and other insurance industries.

Insurance fraud is a serious crime. Individuals caught committing this crime can face substantial fines or even jail terms.

Hard vs. soft insurance fraud

The types of auto insurance fraud can be divided into two different categories: hard and soft fraud.

Hard scam is when a person does their best to purposely receive a loss payout; the penalty for this type of fraud is high and can include imprisonment. Harsh acts of fraud include forced car accidents and planned car theft.

Soft scam, on the other hand, occurs when someone lies to get a better rate or intentionally omits information in order to pay less for their insurance policy. Excessive accident reporting that does not include all of the driver’s names and lying about your address are all kinds of gentle scams.

Common types of auto insurance fraud

“Stolen car

One of the most common types of auto insurance fraud is when a vehicle owner parks a vehicle and then reports it as stolen. The owner hopes to get insurance coverage for the car they got rid of by giving up or otherwise disposing of a car.

Photo credit Thomas Hawk on Wunderstock (License).

Vehicle owners who attempt this type of scam often try to double their profits by getting an insurance statement for the stolen car and then selling the original car. However, this type of scam is difficult for owners because of the traceability of cars in today’s world.

Registration misinformation

Another common type of auto insurance fraud is where people lie about where they live in order to get a lower rate on their insurance premiums. One factor in calculating the insurance premium is where the vehicle owner lives, so lying about the address often leads to a reduction in insurance rates.

Insurance companies can request additional documents to verify your address if this type of auto insurance fraud is suspected.

Excessive indication of repair costs

After an accident, repair shops can overstate what the repair costs will be. The workshop will invoice your insurance company and they will then receive payment for that invoice. If they overstate the cost, they are committing fraud and making more money than they should.

Airbag replacement scam

After an accident, some fraudulent repair shops will not properly replace the airbag. You can use salvaged airbags to complete the repair, or you can pretend the airbag deployed when it didn’t deploy in an accident. If a workshop is caught doing this type of scam, the mechanic could face severe penalties and / or prison terms.

Windshield replacement fraud

This type of scam often results in unsuspecting drivers becoming involved in a fraudulent affair. In this scenario, a driver is approached by someone who claims that their windshield is damaged and needs to be repaired. The person offers to replace it and says your insurance company will take care of it.

If this affects you, your insurance rates could go up and you may need to have your windshield repaired again after they work on it. If you ever have a problem with your windshield, contact a verified windshield specialist for repairs. Don’t become a victim of a parking space swap fraud.

Avoid fraud on all fronts

Aside from these types of auto insurance fraud, there are some contiguous types of criminal activity that some individuals may attempt. Fraudulent personal injury insurance claims after car accidents are known, which can be a major problem for victims of staged car accidents.

All types of auto insurance and personal injury insurance fraud are serious violations that are treated with the utmost seriousness by the law. There are even drivers trying to learn how to buy counterfeit insurance to avoid paying premiums. However, this does not work in the long term and is dangerous.

Make sure you are always truthful when filling out the car insurance information, otherwise you could be charged for your lies.

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