Car Insurance Scams: Are You A Target?


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Sometimes things aren’t what they seem at the scene of a car crash, or even on the repair shop floor. Sometimes, accidents aren’t truly accidents at all. Car insurance fraud costs billions each year, and it isn’t just the insurance companies footing the bill—we all pay for auto insurance scams, whether we’re directly involved or not. Knowing how to spot common auto insurance scams can help keep you (and your car) protected.

The Staged Collision

Perhaps the most common type of car insurance fraud is faked collisions. Fraudsters will either prey on unsuspecting motorists, or they will set up the entire collision scenario, sometimes involving multiple cars, colluding witnesses, and crooked doctors and lawyers. Robert Hartwig, president of the Insurance Information Institute, gave Quoted the details of how these scams work: “Faked accidents designed to result in fake injuries to the occupants of the vehicle are among the most common and costly of auto insurance scams. This type of scam is designed to generate bogus claims payments to crooked medical service providers who ‘treat’ these fake injuries. The occupants of the vehicle who fake these injuries are paid for their participation in the scheme.”

Getting in a car crash is bad enough. What's worse: It might be the result of a premeditated effort.

Jordan Perch, from DMV.com, told Quoted that sometimes criminals will stage a rear-end collision. Perch said, “This type of staged accident occurs when a scammer tries to force the driver behind them to hit them by slowing down or stopping abruptly on a busy street, or by pulling directly in front of another car and braking hard.”

Esurance details five main types of car crash fraud (diagrams at the link):

  • The Swoop and Stop
  • The Panic Stop
  • The Start and Stop
  • The Wave In
  • The Sideswipe

All of these types of collisions happen every day, for real, with no scammers in sight. However, if you are involved in one of these types of run-ins, you would do well to note these possible warning signs, from Esurance:

  • A stranger at the scene refers you to a doctor, lawyer, or repair shop
  • A physician (either one you were referred to or the other party’s) pressures you to file a personal injury claim though you aren’t hurt
  • A tow truck appears without being called

If you think you’ve been the victim of a staged collision, you can report it to the National Insurance Crime Bureau, your local police, or your insurance carrier.

The Counterfeit Airbag

Perch told Quoted that counterfeit airbags are a risk when the originals have been deployed and must be replaced. Perch said, “Many mechanics replace original airbags with ones that have been manufactured abroad and are often unsafe. This is a great way for mechanics to make some extra profit by installing counterfeit parts while billing the driver’s car insurance company for original, more expensive parts.”

A dangerous scam: 1 in 25 vehicles that have had airbags replaced were given counterfeit airbags.

Airbag systems can cost between two and three thousand dollars to replace, and counterfeit, or altogether fake, airbags are easy to come by. CARFAX notes that a recent study found one out of every twenty-five vehicles that needed airbag replacement had fake or nonfunctioning airbag systems—a scary prospect in the event of a crash.

The first way to avoid becoming the victim of this dangerous scam is to have your repairs done by a mechanic you trust. You can also take your repaired vehicle into a certified airbag mechanic for a check. And, if you’re shopping for a used car, be sure to have an independent mechanic inspect all airbags and verify they are present and working properly.

car accident

The Phantom Victim

Perch, of DMV.com, told Quoted that the “phantom victim” is one of the most common car insurance scams. Just how it sounds, after a collision fraudsters will file claims with the other party’s insurance for people who weren’t in the crash, and weren’t on the scene at all. This scam could result from a staged collision, or it could be a crime of opportunity that occurs after a crash.

A good way to avoid becoming a victim here is to document as much as possible after a car crash. The scene of the incident can be hairy, but remember to note how many passengers are present (and report this number to the police and your insurance carrier) and take photos—of the other people involved in the wreck and of the general scene—if you can. Even a few cell phone snaps could stop this scam in its tracks.

The Cost of Auto Insurance Scams

Though these scams are horrifying all on their own, these crimes also substantially raise insurance premiums for every one of us—some reports claim scams like these cause everyone’s insurance to cost $200-$300 more each year.

Jordan Perch told Quoted, “Insurance frauds cause insurance companies to lose a lot of money, which they tend to make up for by raising the premiums for all of their customers. According to the Coalition Against Insurance Fraud, staged accidents – which are most common in New York, Florida and New Jersey – are among the leading reasons why insurance premiums in these states are far higher than the national average. This organization estimates that fake auto insurance claims cost the national economy tens of billions of dollars each year.”

  • Jeff Larson

    Wow, how many times in one article can the word “accident” be misused? Please call it a crash or collision ESPECIALLY if it is intentional. Intentional accident is an oxymoron. Your own publication ran a story earlier this year about misuse of the word “accident”. Please go back and correct the numerous errors in the semantics of this story.

    • Thanks for spotting the error–we’ve made the changes and certainly agree with you about the importance of semantics, especially when it comes to accidents vs. collisions. Your input, as always, is much appreciated!

      • Jeff Larson

        Thank you Julia. I’ve always been impressed with the work done at this site. I apologize if my initial comment was short.