Auto insurance fraud is on the increase

Car insurance is expensive. There is no getting around that. As automobiles get more and more costly to build and to repair, the cost of protecting them against accidents, theft and incidental damage increases as well. As consumers, we should do our best to keep the prices down by not filing frivolous claims and by keeping our deductible as high as we can reasonably afford. Unfortunately, others are not so concerned with keeping car insurance prices low, as the increasing amount of auto insurance fraud will demonstrate.

There are a number of ways to perpetuate insurance fraud, but the crime boils down to one thing - getting an insurance company to pay for something that either didn’t happen or something that isn’t as damaging or expensive as claimed. It adds up; insurance fraud costs insurance companies as much as $30 billion per year. These costs are passed on to consumers in the form of higher insurance rates, so when someone defrauds an insurance company, it costs everyone money.

A recent scam that was uncovered in New York revealed a large-scale medical fraud scheme. Doctors and lawyers were seeking out accident victims and urging them to seek medical treatment at a particular clinic. The clinic then either provided unnecessary services or billed the insurance companies for things that weren’t done.

Most fraud is simpler than that, and generally just involves faking auto accidents. A common scenario is for several cars, working together, to distract a driver in order to coerce him to hit the car in front of him. That car inevitably has numerous passengers who will then claim injuries that require medical attention. This scenario is particularly common in Miami, the city that insurance investigators claim is the number one city in America for insurance fraud. In fact, authorities in Miami have made arrests in the last five years that account for $36 billion in insurance fraud.

Other types of fraud involve auto repair shops, who might be billing for new parts while actually using old ones, or in some cases, not replacing parts at all.

Like all types of financial fraud, the schemes frequently change. The amount of money involved provides tremendous incentive for criminals to find ways to fleece insurers. As the methods change, there is usually a lag in the time it taks for the authorities to catch up and become aware of the problem.

Consumers need to be aware that these things take place, as they could happen to you without you even realizing it. You might get in an accident and be billed for more medical treatment than you need or you might find your car getting billed for more expensive repairs than are necessary. True, your insurer will pay those bills, but if they are fraudulent, and they often are, the cost eventually trickles down to you. After all, the consumers pay the premiums that keep insurers in business.

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