Rampant auto fraud isn’t any accident
The extremes some motorists will go to in order to defraud their auto insurance company.
Consider the case of a Texas man whose girlfriend crashed his motorcycle. Since she wasn’t on his policy, he feared the insurance wouldn’t cover the damage to his bike.
Thus, he hatched a scheme that surely will go down in the insurance annals of “the bizarre and stupid.” To collect the insurance, the man claimed he was the one who crashed the motorcycle, says Ray Albertini, Progressive Insurance’s national director of special investigations. But to make his claim credible, the motorcycle owner needed to prove he had injuries from the accident.
No problem. The guy, according to Albertini, got a friend to tie him to the back of a truck and drag him until he suffered enough serious road rash to make his claim look authentic. “He got the injuries he wanted, but it didn’t do him any good,” Albertini says. His girlfriend foiled the scam when she fessed up to investigators.
“People may laugh, but I see these incidents all the time. They think it’s OK to cheat insurance companies. They view auto insurance fraud as a victimless crime. But when costs go up because of fraudulent claims ... consumers end up paying the price,” he says.
Certainly, some insurers have alienated consumers, says Frank Scafidi, a former FBI agent and spokesman for the National Insurance Crime Bureau.
Motorists resent it when auto insurers move slowly or refuse to pay legitimate auto theft and accident claims. Plus, skyrocketing insurance premiums and crooked practices in some corners of the industry have emboldened those who rationalize that it’s OK to defraud their insurers. The industry needs to show it’s not a “profit-hungry monolith,” Scafidi says.
Meanwhile, scams like those uncovered by Ohio-based Progressive Insurance are commonplace, industry experts say. Investigators with Progressive have even encountered attempts by uninsured motorists who attempt to purchase coverage by phone, within minutes of an accident.
Earlier this year, a Maryland couple called Progressive to buy coverage while their uninsured car, which had caught fire, was still ablaze.
The ruse was discovered when the insurance operator heard the wife yelling in the background that the car was ready to explode.
The National Insurance Crime Bureau estimates that property and casualty insurers -- which includes auto insurance policy writers -- pay more than $30 billion a year in bogus claims. Auto insurance fraud alone is pegged at about $14 billion a year, according to the Coalition Against Insurance Fraud, based in Washington.
In Los Angeles County, which produces 40% of the state’s suspected bogus claims, it’s estimated that losses exceed $8 billion a year, according to the Los Angeles County district attorney’s office.
Besides the number of fraudulent claims by individuals, insurance investigators are contending with more sophisticated and organized fraud rings nationwide. These crime rings thrive in large urban areas such as Los Angeles. They often involve doctors, attorneys, and auto repair experts who file fraudulent automobile or accident claims and profit from these schemes, according to the California Department of Insurance’s auto fraud division.
These rings engage in auto theft, stage accidents involving unsuspecting drivers and file fraudulent repair claims and medical bills.
A common scam in large urban areas is the “swoop and squat” ploy, Scafidi says.
Typically, the perpetrator drives a large older model car, pulls in front of an innocent driver’s vehicle and slams on the brakes, causing a collision.
Sometimes two conspirators are involved. One driver pulls in front of the other conspirator’s vehicle, causing a three-car collision. The innocent driver is blamed and the bad guys collect on the insurance.
Staged accidents often happen at night and target elderly drivers and drivers who tailgate or spend a lot of time on their cellphones, according to investigators. Drivers who appear to be distracted can be easy prey in these scams.
Here’s some tips from the experts on how to avoid becoming a victim of insurance fraud:
* If you are in an accident, make notes of what happened and the condition of the vehicles.
* Keep a camera in your car to document damage.
* Get the identification and descriptions of the driver and passengers in the other vehicles. Also, get names and addresses of witnesses.
* If you suspect the accident has been staged, contact your insurance company and police.
* Don’t tailgate. It makes it easier for drivers to set up an accident. If a car darts in front of you, slow down and keep your distance.
* To report insurance fraud to the National Insurance Crime Bureau, call (800) 835-6422.
Jeanne Wright can be reached at jeanrite@aol.com.
