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What is auto insurance fraud and how to protect from it?

Fraud in auto insurance is one of the costliest crimes in USA. The sad part of the story is that ordinary consumers have to pay higher premiums to cover up this fraud. Hence if this fraud can be minimized, then insurance premiums are bound to get lowered in the long run. In most cases, it has been observed that insurance fraud takes place when some honest consumer gives false information to the insurance company at the time of making the application. This usually takes place when he does so at the behest of organized dishonest gangs who are the mastermind behind such operations.

Fraud in insurance can happen when –

  1. Applicant gives false information only to pay low premium and get the highest coverage without paying anything. He or she wants to get the maximum by paying the minimum amount.
  2. When there is any auto accident many people pad up the claim only to get a higher claim. That helps to cover up the deductable to a great extent.
  3. Make an increased claim of damaged or any stolen property. Sometimes they also overprice the price of the items that have been stolen.
  4. Managing to create some automobile accidents that may help in claiming false claim of injuries.
  5. They hire someone to steal or burn their vehicle in order to claim money from auto insurance – may be to cover up some higher repair costs. These fraud activities increase the burden on the insurance companies, which they later try to recover by collecting higher premium from others.

If you are aware of these activities, you must try to protect yourself from these auto insurance frauds. You can do them in the following ways –

  1. Try to avoid tailgates as these criminals always try to take advantage of the situation by creating a collision.
  2. If there is a minor accident, call the police and inform them about the accident. This will prevent the gang to make larger claim and get more money.
  3. Use a camera phone to document the damage in the accident and the number of people sitting in the other vehicle.
  4. Always try to avoid people who suddenly appear at the scene of the accident and will behave in a way as if he is willing to take you to some attorney or a doctor.

Inform the insurance company about the accident quite soon.

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