Auto Insurance Fraud

Insurance fraud is one of the largest crimes in the US. Here are some most common examples of car insurance frauds:

1. Vehicle dumping, aka “owner give-up”
This type of car insurance fraud occurs when the owner disposes of the vehicle by leaving it somewhere, burning it, dumping it in a lake, or even selling it, and then claiming it was stolen.

In situations where the car was sold before being reported stolen, the fraud is intended to pay in two ways: through an insurance settlement to replace the stolen vehicle and through the sale of the original car.

2. False registration
Where you live affects what you pay for car insurance, and this car insurance scam is designed to mislead insurers and avoid higher premiums.

Drivers who partake in this scam often live in expensive parts of the country or in neighborhoods with higher theft rates, so they register their cars in other states or counties where insurance premiums can be lower.

3. Exaggerated repair costs after a car accident
This one is committed by less-than-upstanding repair shops. Let’s say you bring your car to the shop after an accident, and the mechanics use shoddy parts to make the necessary repairs. By repairing your car with cheaper, possibly unsafe parts and billing your car insurance company for new parts they never used or work they never performed, they’re committing fraud for financial gain.

Body shops can also commit exaggerated repair cost fraud by overcharging an insurer (and a customer) for necessary repairs. By purposely overstating the accident damages, the shop can make money after unneeded repairs.

4. Faulty airbag replacement
This is another type of car repair scam. It happens when mechanics don’t replace the airbag after an accident. Instead, they stuff the compartment with other objects, such as beer cans (yup, you read that right) or packing peanuts to keep the sensors working.

Some states, like California, passed protective laws regarding airbag replacement. Replacing an airbag with a fraudulent one can be penalized by a year in prison and up to $5,000 in fines.

5. Faulty windshield replacement
Windshield fraud can take unsuspecting drivers by surprise. Usually, someone claiming to be a windshield repair specialist will approach you in a parking lot, trying to convince you that your windshield is damaged and you need a new one ASAP. Good news: you’re in luck because this friendly expert just so happens to have your type of windshield on hand. And it gets better because this service will be completely covered by your insurance company. Yep, you won’t even have to pay a dime.

You better take advantage of this now, right?

WRONG. This is a scam that may drive up your car insurance rates and possibly put you in danger. These people aren’t the real deal and will most likely replace your perfectly fine windshield with a shabby one. You might even lose your car insurance coverage if you fall for this type of scheme, especially if this “specialist” uses your insurance information to submit several windshield replacement claims under your name.

Are you OVERPAYING your insurance?
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