Fraud in any industry ultimately costs the rest of the people money in extra premiums or other charges. There will always be fraud, it is human nature. The task is to make the losses due to fraud as low as possible. Much of the fraud is caused by intentionally causing an accident and one of the parties disappears, leaving the victim to pay for damages and faked injuries for the other individuals who remain at the scene of the accident. This is called a “staged accident.” There are other methods of fraud perpetrated by the driver himself or herself.
Methods Of Fraud
There are individuals filing claims for phantom accidents, injuries or a false claim for loss of income. People file multiple claims for the same accident or for a higher cost for a repair. Other people do not report all the drivers who are using a car or register a car in an area with lower premium rates, event though the owner of the car does not reside there. Finally, reporting damages to extra items that were said to be added to the vehicle but were not in reality added on.
You Pay For Fraud
The insurance company will recoup its money by charging honest and good drivers higher premiums for the fraud on the part of others. False claims skew the industry statistics in the wrong direction. Since premiums are based on these statistics, the fraud will make it appear as if a group of drivers tend to put in more claims. Those that perpetrate the fraud cause honest people to pay more than they should. The insurance companies are simply passing on the expense of the fraud to a group of drivers.
Avoid Inadvertently Helping Those That Defraud Others
Drive defensively and within the speed limit and your chances of being caught up in a fake accident scam will decrease, thus cutting incidents of fraud. Be honest in your reporting of driving information. The money saved by not telling the truth will ultimately be paid later.