Insurance Fraud Blog

Insurance fraud has been one of the most common and widespread fraud reported in the world. Cars are expensive, highly desired items and people have expensive auto insurance policies to protect their cars. Seeking to gain illegal monetary gain people will fraudulently make claims on their insurance policies. These illegal methods comprise of insurance fraud and car theft fraud.

Insurance fraud is divided in to two categories. One is soft insurance fraud while the second is hard insurance fraud. The soft insurance fraud involves cheating or lying to the insurance broker when describing your vehicle and exaggerating damages. Soft automobile fraud includes policy owners lying and reporting for many claims on a single injury. Some people also claim for injuries that have not occurred due to a car accident. Lastly, many people mention incorrect information to the insurance companies in reporting the real cost of the damage.

Hard insurance fraud occurs when any policy holder tries to stage or lie about actual accidents or when a person would actually file for medical bills and treatments unrelated to a car accident. Another example would be filing for claims when the policy holder had nothing to do with the accident. Many people also use identity fraud by using wrong state number plates so as to get lower insurance premium costs.


Another example would be insuring your car with your parent’s name, when it should be insured under your name. This happens when young adolescents start to drive and the cost of insurance may be really expensive. But there are risks to using your parents insurance rather than actually being insured yourself. Excellent insurance companies deal with it all the cases of car theft and at the same time they are very strict against people who are willing to commit fraud. They do not hesitate to report to the authorities of any insurance fraud suspicions.
Hard insurance fraud also occurs when many people abuse a car theft policy. The abuse in car theft policy occurs when the policy holder or the owner of the car falsely reports that his car has been stolen. After he reports the vehicle stolen, he tries to destroy the vehicle to get maximum claims under his car theft insurance policy. This car theft plot is known as owner give-up. Many owners also carry out a fraud known as a 30 day specials. A 30 day special occurs when an owner hides their car for 30 days until the insurance company has paid for the settlement. Once the bill has been settled, many cars are found in a deserted area.

Apart from individuals, many crime rings also commit insurance fraud. These rings commit a fraud by using the export route. This export route begins by purchasing a vehicle on money obtained from a bank in the form of a loan. Once the car is bought and an insurance policy is issued, the ring then exports the car out of the country to be sold in the black market. In the meantime, the crime ring reports the car to be stolen in their country and collects the subsequent money from the insurance company.

There are two types of insurance frauds, hard fraud and soft fraud. Soft fraud is referred to as opportunistic fraud. Soft fraud occurs when a policy holder exaggerates damages, in order to receive a higher compensation or when a consumer misreports past driving records when applying for an insurance policy. Soft fraud is far more common than hard fraud

Hard fraud occurs when someone deliberately devices a plan to invent a loss, such as a collision, auto theft, or fire while being covered for insurance. This is done to receive payment for damages. Hard frauds involving the medical industry are the most costly forms of insurance fraud in the United States. An example of soft fraud would be in the auto insurance field. Many times an insured person will claim phony injuries, conspires with a body shop and claims adjuster to increase the payment and receiving a kick back.

Ever heard of auto insurance frauds? You and others as well might not be aware of it, but the fact is that auto insurance fraud is a rampant act in this day and age. There are some that know about it that thinks they can be safe from it even by not having any insurance policy or coverage. But they should think again, because even those who have coverage sometimes are still financially bothered by these fraudulent acts.

This is to help people, especially motorists like you who are either having or not having car insurance coverage, from being a victim of these fraudulent acts. Here are some simple yet helpful tips that everyone could use in order to not be a victim of auto insurance frauds.

First tip in avoiding car insurance frauds is to always keep a safe distance with the vehicle you are following. Because, try to picture this, if you are driving to close to the car in front of yours, there is a high probability of you hitting that car, much more if the driver of that car is indeed planning to intentionally stop. And aside from avoiding fraudulent accidents, other traffic or road accidents will also be avoided by having a safe distance to other cars on the road.

In relation to the first tip, the second is to always have a watchful eye when on the steering wheel. When you are driving, either you have auto insurance coverage or not, being watchful on what is happening in front, on sides, and on the back of your car is always a general rule to follow.

And to keep watchful eye while driving can only be attained when other unnecessary things are not done inside your car. Examples of unnecessary things are texting and talking on phone when in front of the steering wheels. Also things like putting make-up, tying your tie, even eating, and etc., which are things that should already be accomplished at home, should also be avoided.

Finally, the last tip in avoiding car insurance frauds is by not having cheap auto insurance. You may think that you are saving when you avail low costs car insurance. But the fact that there are people who practice insurance frauds or planned accidents, having low cost insurance may not be that money saving. Low cost may mean low quality. And in car insurance, low quality means lesser coverage or lesser situations where you are insured.

Remember that people who practice car insurance fraud do this for a living, and they may even hire a lawyer just for the sake of gaining money from you and your insurance company. But if still you find these tips, unnecessary for you, here is a sample situation of a planned or fraudulent car accident:

A scenario called the ‘swoop and squat’. In a swoop and squat, there are two cars that works together in order to set a planned accident and make it your fault. In this scenario, one car will ‘swoop’ or cut lanes making the other car to stop or ‘squat’, and that car that squats will be the car that you will hit.