How to Identify and Avoid Car Insurance Scams and Fraud

Avoid Car Insurance Scams and Fraud, That is why there are many reasons that can explain why it can be quite useful to have an appropriate car insurance policy and how such circumstances can affect the car insurance cost. Was it the skyrocketing rates that have caused health problems or were the health problems leading to the climbing rates? Car insurance fraud.

That is why car insurance fraud headlines are in the news more now than they have been in decades, the number of financial headlines. However, for most people it remains one of the trending topics which, however, they do not know much about, let alone understand, car insurance fraud. Well, our FINANCEED team is here to answer a question that most people ponder about, fraud, different categories and its implications to car insurance premiums.

 Understanding insurance fraud

What is insurance fraud? It may happen when for example a consumer, agent, insurer or adjuster frauds another for financial benefit as defined NAIC. So it appears that as technology evolves the car insurance fraud becomes more possible. Since there are always instances of insurance fraud, it becomes necessary for insurance consumers to know the various frauds that exist in the market. Let’s go through each.

 Auto insurance fraud types

Some people may decide to lie while applying for a car insurance policy while others may plan how to fake an auto accident with the aim of extorting money from their insurance companies or consumers. NAIC then descries two types of fraud as being hard and soft ones.

Hard fraud on the other hand is when the policyholder deliberately burns his property say a car in the hope of filing a claim on his insurance policy. Car Insurance A type of this kind of frauds can be a staged accident situation, even though it is not as frequent as the previous examples. Another? A planned vehicle theft.

The following are how these two scenarios play out. In a staged car accident a driver will make a plan on how to cause an accident on the road such that an accomplice (planted witness) will testify that the victim caused the accident.

The name itself suggests a kind of planning for a theft of a car, for instance, a car owner will have an ally steal his car and sell it, destroy it or strip its parts then report the vehicle as stolen to an insurance company.

Last of all, as you reflect over these two different categories of car insurance fraud and what people might attempt to do in order to decrease their insurance cost or to get the insurance payment in their favor, it is crucial to understand that car insurance fraud can happen to you.

Non-consumer fraud schemes

Unscrupulous auto repair businesses and car repair scams via airbags are many of the time the offences of chance for wicked technicians and dealerships. Generally these occur when shops will knowingly exaggerate on the extent of the accident damage in order to profit from unnecessary repair. This results in them having potentially a bigger pay off and you with a car which has maybe second hand or mechanical spare parts. It can also increase the premium amount that you pay for the car insurance.

And despite being less frequent, we want to make some awareness for you to know that there are scams that occur inside insurance companies. Premium diversion is when an agent or a broker embezzles policyholders’ premium payment rather than passing it onto the insurance firm.

The last one is insurance company fraud which should also be also familiar to people. Car Insurance This is when fake and unlawful ‘insurance’ organizations and practitioners swindle consumers’ through, of premium amounts for fake policies.

You may think we are trying to overwhelm you with information; forgive us for that. Considering the numerous options for car insurance frauds that exist then the more proactive question is how come with the constant introduction of technology car insurance fraud is becoming popular?

Insurance fraud is one of the most instantly attractive quite vices that people would give their all to indulge in.

There was an intriguing survey released by Verisk a while ago that painted a rather alarming picture of Americans’ perception of insurance fraud not as a crime. We read that people of 45 years old and younger might be jealous of those who practice it. Shocking? Keep reading.

Figures revealed by the research show that insurance fraud temptation rate is over one fourth of the 18-34 years group which supports the idea that it is permissible to provide exaggerated auto damage claims. Realizing that with the continuing young generation, they can easily find reasons as to why they need to engage in insurance fraud, one wonders why engage in insurance fraud.

Assignment on Insurance fraud and its implications

At one time or the other, you must have heard the term ‘impact’ being used in relation to ripple effect. Yes you recall the adage that says ‘the same thing somebody does to you, you have to do it also to him or her. Car Insurance Well, as dirty as it may sound, that same mentality, such as ‘if I don’t look, I won’t see,’ can also be used with regards to car insurance fraud.

For insured drivers involved in insurance fraud, the direct outcome which may be conferred if arrested include fines, imprisonment and or revocation of the license depending on the fraud committed, its level and the state where it was executed.

It could also lead to your current car insurance policy being canceled and getting car insurance again could be a very herculean task.

From the perspective of insurance industry, fraud is something that may be expensive. The FBI said that apart from health insurance, insurance fraud is estimated to be costing the industry 30 to 40 billion dollars per annum to its consumers, of which U. S drivers are paying an additional 400 to 700 dollars annually.

Let’s wrap that up. As the number of car insurance fraud goes up, it results to insurance companies offering more compensation, which in turn mean higher insurance charges for millions of drivers.

You too should be able to protect yourself from insurance frauds.

Good news! The following acts may help one reduce the risks of being a victim to car insurance frauds (drum rolls please).

Here are some tips from Financeed insurance team:

Never cheat your insurance company, make sure to keep all the interactions well-documented. In the process of getting a quote for a new car insurance company or even when providing certain pertinent information such as information about an automobile accident, it is very essential that one always tells the truth.

If something is not clear, do not put your signature to it. Sounds easy enough right? Just imagine, how many people don’t read the information provided in detail and documents. Because, similar to that mermaid who made a deal with an evil octopus to get a human, your signature means something. For instance, when one wants to obtain an insurance cover, they will afterwards give an e-signature. This means that, you are legally entering into an insurance contract through the application—why the need to read all of the information on the application before signing.

Get a second opinion. Because in most cases two is considered better than one, isn’t it? Car insurance can be confusing even for the most outstanding mind and this can be discouraged for any individual. If you ever feel that you are a victim of fraudsters, probably seek for help from other professionals than right now, it doesn’t even matter!

 Report suspected fraud. Car insurance fraud is a criminal offence and, therefore, it should always be reported. If you have the feeling that you have fallen to the scam, consult with your car insurance. If you have witnessed it, then pay a report. This is usually better addressed by going through your own state’s department of insurance. One can also decide to call and clarify if a certain insurance company that he/she wants to do business with is a fake company.

Some of the features that may alert you that the company you are dealing with is an imitation insurance company? First, an agent or broker who employs high pressure selling techniques—it may give that, solar summer sale people who have no tolerance for a ‘no. ’ Second, the premiums of one company could be twenty percent lower in comparison with the premiums of the other companies providing the same type of insurance.

Lastly, the contact information of a company is not easily found or it takes some efforts to find the right contact details of a company. Here’s a heads up: it should always be at the bottom of an organization’s website or on its own web page of the organization.

Applying these tips and warning signs you may be able to avoid or report car insurance fraud to happen to you.

 Fraud prevention by realizing emerging technology and solutions

After the brief analyses of the mentioned aspects, I agree with the assertion that technology with such a fast development has its pros and cons. True, it could be creating an environment that will enable people defraud the system more easily but in actualization, it could go a long way in preventing fraud. How? With the help of third generation data analytics and image and video analytics.

Those insurers who make use of data analysis and processing tools can therefore be able to gain considerable leads within short successions where discrepancies that signify fraud are likely to be noted. These can include the driving behavior or the history of claims so as to increase the chance to identify activities or claims that are most likely to be fraudulent.

Last, due to the fact that more and more drivers use their smartphones or dash cams to gather visual proof, insurers can employ technologies that determine the reliability of video or a picture that an individual provokes a car crash to get a compensation from an insurance company. Perhaps there are some of these capabilities which might be able to note changes or inversions and consequently come up with a presumption that an accident was faked.

Telematics based UBI provides multiple advantages to young drivers and is extremely helpful to deal with insurance frauds. These insurance models involve the use of devices or Smartphone technology to capture aspects relating to the driving pattern.

These tools and technologies help insurance firms eliminate fraud or at least limit them, but also help FINANCEED and other insurance firms to let young drivers manage their premiums based on how they drive their cars.

 The three are the adoption of telematics and the combating of insurance fraud.

That is why insurance fraud is dangerous not only for car insurance companies but for an honest policyholder like you. To avoid being a victim of scams, it would also be wise for you to learn all the different insurance frauds and what some of the signs to look out for would be.

Be careful when submitting your claims and as a society of adequate drivers, we can fight insurance frauds to try and build a safer insurance environment. Step one is always the first step so take it and give yourself a chance at not falling foul to insurance fraud and lock down your travel plans by considering telematics insurance. We need to come together on roads and in our daily life and try to build the future free from fraud.