Non-profit sites like the Coalition Against Insurance Fraud (CAIF) report that auto insurance fraud costs a staggering $12.3 billion or more a year. The worst part is that this cost is passed along to consumers, most of whom would never consider committing insurance fraud themselves. Instead, they find themselves paying up to hundreds more annually on their premiums. Money paid by insurance companies for fraudulent insurance claims add to the companies' annual loss, a statistic that is always used to establish future rates. And in the auto insurance industry, fraud is one of the major cost components increasing the price of insurance for consumers.
Auto insurance fraud often involves staged accident rings and the filing of one or more fraudulent accident claims. This can include staged accidents in which the drivers of two or more vehicles intentionally collide, or accidents caused by con artists (involving you in a wreck that is made to look like your fault). Auto insurance fraud can also be performed by auto repair shops or mechanics that bill for unperformed work or parts. Or by individuals who do get in a wreck and claim the loss of more property than was actually in the car, charge for repairs and/or damage that was not due to the current accident, or report fraudulent injury claims of passengers. There also exists in the industry what is known as a "paper claim," which involves an accident that never actually happened and only exists on paper. Organized accident rings often find others in the community to participate in the creation of accidents for a cut of the payout. For this reason, be wary of any unasked-for referrals to places such as repair shops, law offices, or health care facilities/doctors if you are in an accident.
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