Common types of insurance fraud

1. Faking a stolen car.

The missed car payments are piling up, and you don’t know how to get out of it. It would be nice if the car was stolen so you could file a claim. But faking a theft, whether you hire someone to steal it and wreck it or conveniently leave the keys in the ignition in an unsavory location, rarely works.

A good SIU investigation includes a financial review to identify if you're behind in payments, a check to see if you're missing a set of keys and whether there was forced entry into the vehicle. The National Motor Vehicle Title Information System (NMVTIS) assists law enforcement in preventing and deterring fraud. Investigators will likely request bank records, phone records, and any other resources that increase their chances of catching you.

2. Accidentally starting a fire, on purpose.

A fire can create a total loss in a hurry, and some people might think they can get away with an accidental burning to make a claim. But with technologies like computer simulations and burn pattern analysis, it’s relatively easy for investigators to determine if a fire was arson vs. accidental.

3. Inflating your injuries

There are some unscrupulous doctors out there, and fraud cases involving an injured party seeking more medical care than necessary to split the insurance payout aren’t uncommon.

Every SIU has medical experts who can tell if your injuries aren't serious enough to need lots of medical attention. In addition, they keep track of doctors who repeatedly provide excessive treatment or attorneys who repeatedly recommend certain clinics.

4. Faking injuries altogether

SIU accident investigators can tell what kind of damage you and your car will likely 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 if you insist you have injuries that aren’t consistent with the evidence.

Again, an unscrupulous doctor might help you out, or a lawyer could help you sue for pain and suffering, but odds are good, it won’t work out well for you.

5. Bringing forward witnesses who weren’t actually there.

You’re afraid you’ll be at fault in an accident, so you ask your cousin to tell the insurance company he was there and he definitely saw something happen that proves it wasn’t your fault. But when witness accounts differ, insurance companies get suspicious, and with cameras everywhere these days it’s a bad idea to make up fake witness testimony.

6. Claiming old damage was caused by the accident.

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. However, the SIU can use rust analysis and wear patterns to determine if the damage is new or old, and adjusters are trained to look for that sort of thing as well.

7. Getting a repair shop to pad the estimate

Maybe you have a buddy who runs a body shop, or you just happen to know a shop that’s got a reputation for being morally flexible. Having the repair shop add extras to the estimate to get the insurance company to write a bigger check than is necessary seems like a good way to make a few dollars off of your claim. Unfortunately, insurance companies have their own experts to create repair estimates, and they’ll know when the numbers are way off base.

8. Buying insurance after the damage happens

You don’t carry comprehensive coverage to save money, and 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.

Filing a claim right after you add or change coverage is a red flag for insurance companies. They’ll investigate, and odds are good they’ll find some evidence that the damage existed before the incident.

Insurance fraud carries hefty penalties

These are just a few ways an insurance company's SIU can catch fraud. They also work with law enforcement, state departments of insurance and fraud bureaus to identify insurance fraud and assist in prosecuting the offenders.

Insurance companies see fraudulent claims all the time, and they are on the lookout for telltale signs.

If you're caught, penalties can range from denial of your claim to cancellation of your car insurance policy to heavy fines or jail time. In other words, it’s not worth it.