The annual rise in insurance premiums due to policyholders who file claims and are compensated by insurers for causing accidents is enough to make auto insurance policyholders mad. To combat criminality, there should be certain measures and everyone must take part in the fight.
Even though they have a clean driving record, policyholders don’t like receiving notices about an increase in their auto-insurance premium. Many people believe that companies are trying to make excessive profits and exploit their customers. This is not true. The main reason for the steady rise in premiums is auto insurance fraud. This increases the cost of insurers and bounces back to policyholders through higher premiums. This crime has become a lucrative business for many people. Every year, thousands of policyholders get away with making false claims. In an effort to combat this problem, most insurance companies have established investigative units. However, only a small number of perpetrators are caught. Get an online quote if your premiums are rising.
Recent statistics show that car insurance fraud has cost motorists an extra $300 per year. It is important to ask “How can these criminals ripoff their insurance providers?” These are some of the most common methods:
1. Policyholders get rid of their cars
This is quite common. This happens when a motorist leaves his car in a lake or sets it ablaze. These claims can be difficult to investigate. The driver could simply claim that they took his car. It is difficult for investigators to conduct any meaningful investigation.
2. Vehicle Theft: Made-up Report
If the owner decides to sell the vehicle before it is reported stolen, there will be two outcomes. First, the owner can receive compensation for the replacement and second, the repayment of the original sale.
3. Overestimated Repairs and Replacement Costs
This is a common practice among repair shops. Repairers may charge insurance companies for expensive parts, but they might fix a car using low-cost parts. Many shops charge thousands of dollars to replace an airbag that has not been replaced. This offense can land the perpetrator in jail for up to one year and a fine of up to thousands of dollars.
The “golden hammer” insurance scam is another popular one. The “golden hammer” is a method of inflating insurance claims by using a hammer to inflict severe damage on a vehicle that has been involved in an accident. These unsavory acts can be reported to authorities immediately to have them paid. This will reduce the incidence of insurance fraud.
4. Register for Falsified Personal Data
Your zip code determines your insurance rates. Many people are smart enough to register with false addresses and lower premiums. This is against insurance ethics and your insurance package could be terminated if you are caught. When filling out the insurance registration form, make sure you have filled in your correct address.
5. Bloated Cost of Windshield Replacement
Ever been in a situation where someone approaches you and tells you what the consequences are for your cracked windshield? This scam is growing in popularity across the country. They tell customers they can repair the windshield in a matter of minutes and that their insurance will pay the rest. In reality, they only replace the windshield with a cheaper one and the insurer covers the entire cost. Don’t fall for the trap. You should visit a mechanic if you have to fix your vehicle.
Join The Fight Against Auto Insurance Fraud
Insurance industry has been hampered by the problem of car insurance fraud. We can reduce the problem by making small efforts. Report any signs of insurance fraud to your local insurance department immediately.
