More criminals are devising elaborate staged vehicle accidents—complete with fake injuries—to collect on insurance policies, according to the Insurance Information Institute (I.I.I.). Not only can these staged accidents cost honest policyholders and auto insurers billions of dollars annually, but they create unsafe conditions on roads and highways—particularly when the scheme goes wrong.
“Staged auto accidents are a dangerous criminal activity that targets innocent drivers with increasingly bold schemes aimed at defrauding insurance companies,” said Loretta Worters, VP with the I.I.I. “Not only do honest policyholders ultimately end up paying more for auto insurance, but those committing the fraud can cause serious injuries or death.”
Staged accidents aren’t the only way to defraud consumers. Fraud may be committed by a number of different parties involved in an insurance transaction: applicants for insurance; policyholders; third-party claimants; and professionals who provide services and equipment to claimants. In addition to staged accidents, common fraud practices include “padding,” or inflating actual claims; misrepresenting facts on an insurance application; and submitting claims for injuries or damage that never occurred, services never rendered or equipment never delivered.
Fraudulent automobile accidents occur more frequently in urban areas, where there is a greater number of vehicles, and in wealthier communities because drivers there are perceived to have better insurance coverage, the National Insurance Crime Bureau (NICB) noted. Criminals often target new, rental or commercial vehicles because they are typically well insured. Furthermore, criminals tend to prey on women driving alone and senior citizens since they are perceived to cause fewer problems and are less likely to be confrontational at accident scenes.
Such organized scams are especially common in states that have so-called, “no-fault” auto insurance, a term used loosely to denote any auto insurance program that allows policyholders to recover financial losses from their own insurance company, regardless of fault. Twelve U.S. states have no-fault auto insurance laws, with Florida topping the list of no-fault states with questionable claims involving staged accidents.
The best defense against becoming involved in a staged accident and auto insurance fraud is to know what to look for. According to NICB, here are four of the more common staged accident scenarios:
Here are some warning signs that fraud is being perpetrated:
The I.I.I. also recommends taking notes at the scene of an accident. This will make the claims process easier and provide a record of the accident in event there is a fraud investigation. Keep a pad and pencil in your glove compartment in order to note the following:
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