Insurance fraud is becoming more frequent as people look for "creative" ways to make money in the struggling economy. Car insurance companies find that people file more claims in a down economy, often for smaller amounts. And, fraud is an increasing problem. With so many claims for car insurance companies to process, it may seem like a fraudulent claim can slip through unnoticed. Not so.
Just like the team on CSI uses advanced techniques to analyze evidence and figure out what happened, an insurance company's Special Investigations Unit or SIU—which often includes reps with law enforcement experience—conducts a thorough investigation to detect fraud. (Please note that Insurance.com reminds consumers that insurance fraud is illegal and a very bad idea.) Here are a few things fraudsters try to get away with—and why it's rare that they will:
1. Leave your car unlocked with the keys inside.
(When it disappears, pretend you don't know what happened and report it stolen.) The missed car payments are piling up and it's costing you way more than it's worth. Wouldn't it be great if you didn't have to worry about it anymore? A good SIU investigation includes a financial review to identify how far behind on your payments you are, the discovery of the fact that you're missing a set of keys, and, when the car is recovered, that there are no signs of forced entry.
2. "Spill" a little gasoline near the engine and report vandals torched your car.
OK, so hiding the car or arranging to have it stolen won't work, but if the evidence burns up, there's no way to figure out what happened, right? Wrong. Burn pattern analysis, computer simulations… it's not hard to spot fires that were intentionally set.
3. Visit the chiropractor as much as possible after a car accident.
(Especially if you're not really hurt. You'll get free adjustments, and maybe the doctor will cut you in on a little extra money if you ask nicely.) Every SIU has medical experts who can tell if your injuries aren't serious enough to need tons of medical attention. In addition, they keep track of doctors who repeatedly provide excessive treatment or attorneys who repeatedly recommend certain clinics.
4. Claim whiplash from an accident when you don't have bumper damage.
(Bonus points if you weren't even hit from behind.) SIU accident investigators can tell what kind of damage you and your car are likely to sustain from a collision. If you weren't hit hard enough or from the right angle, they'll know you're making a false auto insurance claim.
5. Add a few cousins or friends who weren't in the car to your accident claim.
The accident investigators will immediately be suspicious if accounts of a collision differ. If what you say changes, or doesn't agree with the police report and accounts of the other driver and any witnesses, it won't be good.
6. Include previous damage to your car in your loss report.
How could an investigator know when the damage happened? You've wanted to fix the dent in your door for a long time now, and this seems like the perfect opportunity. It's not, because the SIU can use rust analysis and wear patterns to determine if the damage is new or old.
7. "Negotiate" with the repair shop to pad the estimate.
Your car insurance will cover the damage to your fender, which is the good news. The bad news is that you still have to pay the deductible. Maybe the repair shop could just add your deductible to their bill? However, the SIU fraud claims adjusters know how long a repair takes and how much the parts cost, so they'll know the estimate is too high. And, a reputable repair shop won't risk its reputation to help you commit fraud.
8. Buy insurance for a loss you already had.
This is one of the all-time classics. You've been meaning to get comprehensive and collision coverage for awhile now, but never got around to it. Unfortunately, a tree branch just fell on your car, breaking the windshield and severely denting the hood. So, you call your auto insurance company and add comprehensive coverage, then file a claim a few days later. The problem? During the investigation, the SIU finds out you started calling body shops to get estimates before you had comprehensive coverage. Not a good situation for you.
These are just a few of the ways an insurance company's SIU can catch fraud. They also work with law enforcement, state departments of insurance, and the justice system to identify insurance fraud and assist in prosecuting the offenders. Many companies have computer programs that flag suspicious claims for review by the SIU. If you're caught, penalties can range from denial of your claims, to cancellation of your car insurance policy, to possible fines or jail time. In other words, it's not worth it.
If you suspect a person or group is committing insurance fraud, you can report it to the police, your insurance company, or the National Insurance Crime Bureau. You might even get a reward.
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