Reader Question:
I’ve heard that one of the causes of high prices for car insurance is fraud. What’s auto insurance fraud and how do I protect myself from it?
Anthony
Great question, Anthony.
Car insurance fraud isn’t something very many of us think about, even though we should. It’s aggravating enough to worry about legitimate car crashes and claims that the idea that there are people out there just making stuff up to get premiums raised and your insurance company to pay more is beyond imagining! But people do it, and if they do it to you, not only can your rates raise, but in some cases you can become implicated in it as if you had committed a crime, even if you’re the victim.
That’s not news. There are bad people in the world, and the number one thing you can do to protect yourself from them is know that they’re there, and avoid actions that they could take advantage of.
Some ways that fraud is committed and how you can protect yourself:
- Tweaked billing from repair shops. Say you actually did get into a wreck and you filed a claim and your car is being repaired. The shops are required to declare the correct amount for fixing the car, but one of committing fraud is tweaking those charges so that the shop can get more out of the insurance company. Know what’s wrong with your car, know what needs to be fixed, and know about the communication going on between your repair shop and your insurance company. Being vigilant is the best way to keep your hands clean if fraud is committed around you.
- Deliberate accidents. This one can take a lot of forms. Sometimes it involves both drivers on an empty road, both with intentions of making insurance claims, who deliberately crash their cars. Another involves one driver being innocent and the other deliberately causing a wreck so that a claim can be filed–usually this is done in such a way that it’s the innocent driver who receives blame for the accident. The best way to guard yourself against this is to practice defensive driving. Always keep a distance between yourself and the car in front of you and be watchful of how other drivers are behaving.
- Phony reports. Sometimes people who handle car insurance fraud will file fake police reports in order to make a fraudulent claim. Claimants and their lawyers will make claims based on non-existent injuries and accidents, and the amount awarded can reach up to $900,000. This kind of fraud can make prices go up for everyone.
Remember that one of the best ways to protect yourself from insurance problem is to watch, take care, and document! By keeping an eye on how you drive and knowing what’s going on from beginning to end with an auto accident and insurance claim, you’re protecting yourself. Keep a disposable camera in your car so that, if you by chance should get in an accident, you can take photographs and have proof of the condition of both cars before any claims are filed. Always knowing what’s going on is the best way to protect your own back should something fishy go on in the process.
Take care,
Fashun Guadarrama.