In these unprecedented times of social distancing, it’s undoubtedly a difficult time for us all. While the government has been releasing auto insurance policy changes to provide some financial relief, we are also more prone to scams and insurance fraud now more than ever. We often don’t think of the possibility that we could be committing insurance fraud, but it can happen to any of us. So what is insurance fraud?
Insurance fraud is a crime committed when a person deceives an insurer to obtain some benefit or profit that they are not entitled to. It may not be intentional and anyone can fall for the trap, even if we don’t realize it. When it comes to car insurance fraud, there are people who target certain victims which can lead to them serving time in prison. This is why it’s necessary to be cautious when you see it happening. Here are 5 types of car insurance fraud.
1. False Address Registration
Registering your vehicle under a false or incorrect address is considered a method of misleading your insurance company to avoid higher premiums. The reason being that insurance rates are highly dependent on which city or region you reside in. Drivers who usually take part in this scam live in expensive areas with higher theft rates. By registering their cars in other neighbourhoods or even provinces, insurance premiums can be lower. While this may seem like a smart move, the consequences are not worth the risk.
2. Intentionally Getting Into a Collision
Purposely getting yourself into a car accident in order to get your insurance company to repair a car part is considered fraud as well. Some drivers who have previously damaged a part of their vehicle might find that it’s a good idea to get into a collision in order to get their vehicle repaired for free. Not only does this risk someone’s life but can also increase their insurance rates and others’.
3. Staging a Car Theft
Leaving a car unattended for long periods of time, burning it, dumping it in a body of water, or even selling it and claiming to be stolen can all constitute as faking a car theft. If the car is sold then claimed to be stolen, the fraud can pay using an insurance settlement through the original sale of the car and replace the stolen car.
4. False/Exaggerative Claims
Sending your car to a repair shop? Make sure you research shops before, as some may make false claims. Some of these shops will repair your car parts with cheaper and potentially unsafe parts, in order to bill your insurance company for new parts that they have never replaced or used. They might also overstate accident damages and overcharge an insurance company by exaggerating the repair cost. Regardless of either, these repair shops are committing fraud for financial gain and are best to be avoided. Keep yourself protected by reading reviews and being cautious.
5. Fake Airbag Replacement
When getting your airbag replaced after an accident, mechanics might not actually replace the airbag. Instead, they’ll stuff objects that can be compressed and weigh heavy enough to keep the sensors working, such as cans and plastic bottles. This act can cost them about $5,000 in fines and sentence them to a year in prison. This act is extremely harmful to car passengers’ lives as these objects may be sharp and can cause serious injury or even death to passengers if they were to enter another accident.
Insurance fraud can harm us all whether that’s financially or by risking our lives. Understanding what constitutes as fraud is the best way to prevent it from occurring. When reviewing insurance policies, it’s important to be open and honest with your insurance provider at all times to avoid situations like these from occurring. Our team is always more than happy to discuss what is covered in your policy. Contact us today to learn more about how you can protect yourself from insurance fraud.