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Red Flags

Automobile insurance fraud in the U.S. historically has taken several forms. The most common fraud schemes involve automobile property and automobile accidents.

Automobile Property - This type of fraud most often involves dishonest auto body and repair shops and/or insureds who may employ a variety of illegal or questionable techniques including:

• Reporting parts of vehicles as damaged or lost when in fact they were not damaged or lost prior to the shop receiving the vehicle.
• Making final cost in excess of the original estimate of damage.
• Billing for repairs that were not authorized.
• Charging for genuine parts when aftermarket or used parts from a junkyard were used.
• Pounding out dents or using bondo when charging for brand new auto parts.
• Falsely reporting stolen vehicles or vandalism of vehicles in order to collect insurance monies.

Automobile Accidents - Automobile fraud often involves organized auto accident rings. Staged auto accidents, which are not accidents at all, follow several basic schemes including:

• Suddenly stopping for no apparent reason
• Intentionally disregarding the right-of-way
• Giving up the right-of-way in order to cause an accident
• Claims report list passengers who were not in the vehicle at the time of the accident
• Witnesses are listed who were not at the scene of the accident
• Injuries claimed are excessive compared to vehicle damage
• Driver has a temporary vehicle registration
• Prior damage to the other vehicle
• Contact by an attorney without being solicited

If you have been in an auto accident, be cautious of any unsolicited referral to a body shop, law office or medical office. Organized accident rings and cappers actively solicit others in the community to participate in the creation of accidents. Often these accidents only exist on paper (referred to as paper accidents), and no innocent parties are involved. Paper accidents have gained in popularity among fraud perpetrators, as they are less dangerous from a bodily injury standpoint, and there is less likelihood of police involvement.