Most state agencies in charge of motor vehicle services define car insurance fraud as “any attempt to cheat an insurance company in order to gain money”. This fraud comes in various forms including the filing of exaggerated claims or the staging of an accident. The irony of car insurance fraud is that although the insurance company bears the initial financial burden of the fraud, the real burden of fraud lies on every insured driver (including the beneficiaries of fraud) in the form of increased rates of insurance premiums. It is therefore imperative that every driver takes necessary steps to avoid falling victim to any form of car insurance fraud.
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For drivers who have no intention of involving themselves in any type of fraud scheme, the best way to avoid falling victim to such scams is to be well informed about the most common forms of vehicle insurance fraud. In this way, you can easily spot such schemes and avoid them before it is too late.
Most Common Car Insurance Fraud Schemes and Ways to Avoid them
- The rear-ender scam: in this scenario, a driver suddenly pulls in front of you and abruptly slams his brakes so that you hit him from behind. The natural inclination in this case is for law enforcement and insurance companies to conclude that you are at fault. These scammers can only succeed with this if they notice that you are distracted while driving. The best way to avoid falling victim to them is to always be vigilant while driving. Avoid using your cellphone or any other thing that will distract you while driving. Additionally and if you want to take extra precautions, you can invest in a dashcam that will automatically start recording when the car is in motion.
- The wave through scam: in this scenario, the scammer is either driving out of a side street or opposite you at a stop sign. Although he clearly has the right of way, he waves you through to go ahead. The instant you proceed to drive ahead, he rams into you and simply denies waving you through when the authorities arrive. The best way to avoid this situation is to allow the driver who has the right-of-way to proceed before you no matter how innocuous he may look.
- Exaggerated claim scam: in this scenario, the scammer either claims more damage to his car or feigns more severe injury in order to get bigger compensation from your insurance company. In some cases, he may even inflict superficial damage to his car prior to the staged accident, and claim that the damage was caused by the accident. In the event of an accident, whether legitimate or staged, the first step you should take is to take note of the conditions of both vehicles and their occupants. If possible take photos with a camera or your smartphone to prevent distortion of details. Then call law enforcement, after which you call you insurance company for instructions on the next steps to take.
Although there is no end to the number of ways in which car insurance frauds can be staged, it is important for you to always take steps to spot possible cases of such fraud. Always drive defensively on the road and report any accidents to the appropriate authorities an soon as possible.
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