Automotive Journal

When thinking about car insurance scams, you may be thinking about the large companies that collect your monthly premium and then don’t pay out on legitimate claims. However, the majority of auto insurance scams actually come from the person paying for the insurance. Ever wonder why your car insurance quote is as expensive as it is? Below, we will go over a few of the most common car insurance scams:

How about someone conveniently making a claim just as a major part is about to wear out? For example, just as the car’s engine hits the 150,000 mile mark, an accident occurs that requires the engine to be replaced.

Other dishonest drivers stage a low speed accident, and then claim thousands in medical bills, sometimes going so far as to claim permanent disability.

A variation on this theme occurs when the driver stages the accident with passengers in the car. These passengers then also make claims and when they receive their settlements, pass along a percentage to the driver.

What may seem like a relatively minor scam, but can actually run into serious money is the person who, wanting to make sure that parts are replaced and not just repaired, will intentionally cause additional damage after the accident.

The last type of car insurance fraud that we will discuss is the type that comes from the auto repairer. If you’ve ever wondered why different repair shops will provide drastically different quotes for the price? It’s because the money isn’t coming out of your pocket, so they are pretty much free to provide whatever price they choose.

There are two different techniques that the car insurance companies use to combat the scams. The first is through the use of deductibles. Because each person knows that at least some of the cost will be coming out of pocket, it insures that you only use the insurance when absolutely necessary. Also, when you use your insurance, you price goes up to be insured and you wont get a cheap car insurance quote for up to 7 years from an accident. The last way they combat fraud is by making it a criminal offense that will put you in jail if caught coming fraud.

There are so many ways to commit auto insurance fraud, though, it is almost inevitable that the rest of us will be stuck making up for a few dishonest scammers. Auto insurance companies factor fraud into every quote, which is a sad state of affairs, indeed.