Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that exis...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Apr 23, 2020

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Things to Remember...

  • Auto insurance fraud causes businesses to have to pay more for their coverage
  • It’s estimated that most people pay between $200 and $300 extra per year on their car insurance premiums because of this kind of fraud
  • Insurance fraud can involve anyone from average folks to mechanics to claims adjustors

You might not realize it, but you need to be concerned about auto insurance fraud.

When you become a victim of this kind of crime, you can find yourself owing thousands or even tens of thousands of dollars, and have no way to pay it.

Even if you’re not a victim of auto insurance fraud, the fact remains that rampant insurance crimes like this add a significant amount of money to your annual insurance bill.

It’s estimated that most people pay between $200 and $300 extra per year on their car insurance premiums because of this kind of fraud.

You can find and compare auto insurance quotes from many different auto insurance companies. Simply enter your zip code above to get started!

Auto Insurance Fraud Costs Everyone

In addition, auto insurance fraud causes businesses to have to pay more for their coverage, as well. This means that they have to charge more money for the goods and services that they offer, further exacerbating the scarcity of

This means that they have to charge more money for the goods and services that they offer, further exacerbating the scarcity of cheap auto insurance.

To really get a handle on what auto insurance fraud does to you and what it really costs, it can be helpful to understand some of the types of insurance fraud.

Essentially, there are two categories of fraud and each has its own characteristics.

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Hard Auto Insurance Fraud

The first kind of auto insurance fraud to consider is what’s known as “hard” fraud. This involves creating an event that would be covered by your insurance.

This might include things like:

  • Staged or intentional accidents. This would include things like intentional rear-endings, as well as things like people who intentionally set their car on fire.
  • One-car accidents in which the driver claims that the accident was actually caused by a hit-and-run driver.
  • False injury claims, both for people who were actually involved in the accident as well as others who were not even in the vehicle at the time the accident occurred.

Soft Auto Insurance Fraud

The other kind of insurance fraud is “soft” insurance fraud. These types of cases usually involve someone who has a legitimate claim, but who may actually pad the claim so as to get more money out of the auto insurance company.

Examples of this include:

  • Adding previous damage to the vehicle on the auto insurance claim
  • Conspiring with the auto repair shop or an insurance claims adjuster to increase or “pad” the repair estimate
  • Conspiring with medical personnel to receive and/or bill for medical procedures or treatments that aren’t necessary.

Insurance fraud can involve anyone from average folks to mechanics to claims adjustors.

Be vigilant about avoiding insurance fraud, and consider talking to an attorney if you believe fraud has taken place.

You should avoid all of the situations that might lead to these kinds of auto insurance claims.

Knowing what they are can help put you on the lookout for situations that might lead to these disasters.

Enter your zip code below to get started comparing free auto insurance rates and start saving some money!

References:

  1. https://theintercept.com/2015/05/23/insurance-scam-fleeces-poor/
  2. http://www.investopedia.com/terms/i/insurance-premium.asp
  3. https://www.statefarm.com/claims/resources/report-insurance-fraud
  4. https://en.wikipedia.org/wiki/Hit_and_run
  5. https://www.nationwide.com/insurance-claims-center.jsp