Poor Economy To Blame For More Auto Insurance Fraud

Monday’s Post 11/7/11 –   Car insurance fraud is not a new phenomenon in our country. Since insurance carriers started insuring automobiles; people have found ways to make false and fraudulent claims to their auto insurance policies. This money-making scheme has increased dramatically in the last few years in Kern County, California.  The reason for this, state experts say, is the  recession that has seen the money supply tighten and the cost of living go through the proverbial roof.  Many people are finding it hard to make regular monthly payments for their auto insurance.  If you can’t afford your car payment and auto insurance; normally the right thing to do in such a case would be to return the car to the dealer. Some people however, are resorting to insurance fraud as a way of getting the insurance carrier to finish off their car payments.

Kern County Deputy District Attorney says that incidences of auto insurance fraud  have increased enormously despite the fact it’s against the law and the penalties for such acts are serious. The net effect of this  trend has been a drastic increase in the cost of auto insurance payments. One of the better documented fraud games used by criminals involves arranging for their cars to be stolen and then proceeding to lodge a claim with their auto insurance company.

Another frequently scheme employed is popularly known as ‘insurance lapse.’ With this practice, a person delays making insurance premium payments in the hope that his policy will lapse. In the event that an accident happens during this period, the person renews his policy without first informing his provider. He or she then waits for several weeks before informing his provider.

There are many other auto insurance schemes that are commonly used. Accident scams such as ‘The Swoop and Squat,’ ‘Drive Down,’ ‘Start and Stop’ and ‘Sideswiping’ are some of these. All of these are stage-managed tactics that are used by criminals to artificially and intentionally create an accident, all in the hope of getting insurance payments from their carriers. The estimated cost of insurance fraud in the country is a whopping $30 billion annually, which translates into an extra $300 in insurance premiums per driver.

Many people do not realize the seriousness of these fraudulent practices and view them merely as misdemeanors rather than the serious felonies they are. While it is understandable that times are tough and many people who lost their jobs during the economic downturn have yet to fully recover, getting involved in such desperate scams can leave them in an even bigger mess. The worrying thing is that even erstwhile responsible citizens with no criminal records are getting involved in these scams without fully realizing the repercussions.


Michael E. Dortch
President &  Managing Agent
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602