Generally, insurance fraud is fought by fraud bureaus. Fraud bureaus are state agencies charged with the investigation and prosecution of insurance fraud in their state. Most states have fraud bureaus which investigate fraud across nearly all lines of insurance, including automotive. However, there are those states that do not have multi-line fraud bureaus. Those states are Alabama, Illinois, Maine, Michigan, Oregon, Vermont, Wisconsin, and Wyoming.

Those states without insurance fraud bureaus, such as Illinois, rely heavily on private industry special investigation units (SIU) to identify and deter fraudulent insurance claims. The accident reconstruction experts at Crash Data Services, LLC can assist these SIU agents by providing clearly articulated evidence of automotive insurance fraud.

Automotive insurance fraud has existed since the time that auto insurance policies first became available to consumers. Fraudulent auto claims account for a significant portion of all claims received by insurers, and cost billions of dollars annually.

Types of automotive insurance fraud are varied, and take place across all lines, including liability only, commercial, and comprehensive policies. Fraudulent auto insurance claims can involve exaggerated claims of injury. Or, they can involve deliberately caused or staged accidents.

The complexity of automotive insurance scams varies greatly. They generally fall into one of two categories, either soft automotive insurance fraud or hard auto insurance fraud.

Soft Automotive Insurance Fraud

Soft automotive insurance fraud can involve the exaggeration of injuries sustained as a result of a traffic accident. The Rand Institute for Civil Justice estimates that one third of people hurt in traffic accidents exaggerate their injuries.

Or, a person might file a claim over a real injury, but one that did not actually result from the collision in which they were involved. Still other motorists will try to pump up the value of a claim by misrepresenting the actual cost to repair their vehicle. Many of these types of auto insurance fraud are performed with the hopes of off-setting the premium of the policy.

Hard Automotive Insurance Fraud

Hard automotive insurance fraud, however, can be much more dangerous. These types of auto insurance scams can include staged automobile collisions. One of the most infamous forms of the staged accident is the swoop and squat. The swoop and squad involves two offending vehicles and one unsuspecting victim. In this case, one of the offending vehicles drives in front of the victim, while the second offending vehicle swerves in front of the first. The first offending vehicle then abruptly slams on the brakes, causing the victim vehicle to rear-end it. Often, the defrauders who perpetrate this type auto insurance scam will target persons talking on cell phones, driving with children or infants in the vehicle, or the elderly.

The profitable nature of these types of staged accidents has led to the terminology “crash for cash” scams. In other words, defrauders think of staged accidents as a means of getting wealthy.

Beyond staged traffic accidents, still other forms of hard auto insurance involve the filing of a claim when the person was not actually involved in the accident. For example, when a vehicle was rear-ended in a crash, there might only be one person in the car. But, when the claim is filed with the insurer, there may be 4 or 5 people who claimed that they were also in the car at the time of the accident.

Another form of hard auto insurance fraud involves the submission of claims for medical treatment that was not actually received. Often, an insured will make an arrangement with a deceptive chiropractic specialist or medical doctor, wherein the insured allows the specialist or doctor to bill the insurer for services, even though they are never received. The insured then receives some portion of the chiropractic or medical fees.

And finally, some auto insurance fraud involves the outright fabrication of injuries. These injuries often involve soft tissue injuries of the neck or back. These specific types of injuries are difficult to identify medically.

These fraudulent auto insurance claims often directly shape the existence of innocent people through accidental or purposeful injury or damage. And, even if consumers are not directly affected by a staged traffic accident, both soft and hard auto insurance fraud causes general consumer premiums to be higher than necessary. Auto insurance fraud adds an estimated 13-18 billion to the annual insurance bills that Americans must pay.