Scams are everywhere and we have all come across one in some form or another. A prince from Nigeria emailing you to borrow money so that he can get his inheritance. The IT expert that needs your information so he can fix the virus on your computer. The IRS employee who threatens arrest, deportation or suspension of driver’s license if you don’t wire the money you owe in taxes.
Individuals face scams regularly, but businesses can face them as well, especially insurance companies. Most recently, 24 people were indicted in Nevada for staging car crashes. The fraudulent insurance claim schemes brought charges of racketeering, conspiracy, fraud, and battery against them. The typical scenario involved the cooperation of two drivers. The two cars would be in front of a third unsuspecting car. The first car would stop short causing the second car to hit it and the third following suit. In one case, an elderly couple was taken to the hospital with injuries.
Not all 24 people indicted were drivers. Some allowed their names to be used for false insurance claims, others allowed their cars to be used. Over 20 fraudulent claims were made in a 2 ½ year period. Claims totaled to around $200,000 with more than 12 insurance providers.
Insurance providers are privy to insurance fraud. There are several ways that car insurance fraud can take place. A common scam involves windshield replacement. You may be told that you need a new windshield and, luckily for you, that is covered by insurance. Your good windshield is then replaced with one of lesser value, insurance covers it, and the person/business who replaced it walks away with the money. Two other common insurance scams involve body shops as well. Exaggerating repair costs after a car accident and replacing parts with cheaper parts happens often. Also, faulty airbag replacement became such a problem that California had to pass protective laws against it. Other common fraudulent insurance claims include falsely claiming a car was stolen and false registration (avoiding high premiums by registering a car in other states or counties).