This type of fraud entails someone deceiving an insurance company about a claim involving their personal or commercial motor vehicle. It can involve giving out misleading information or providing false documentation to support the claim.
The majority of automotive insurance fraud arrests in Pennsylvania involve:
- staged auto accidents and false claims of injury
- false reports of stolen vehicles
- false claims that an accident happened after a policy or coverage was purchased
- false claims for damage that already existed
- claimants who concealed that a person excluded from coverage by their policy was driving at the time of the accident
Here are a few typical scenarios to illustrate some of the different ways automotive insurance fraud can be committed:
Susan was driving without insurance and had an accident. When she applied for insurance, she lied. She said she’d had no accidents. Then she filed a claim saying that her car had been damaged, lying that the accident happened after the policy took effect.
When Howard purchased his policy, he admitted his adult son Trevor lived with him but didn’t have a valid driver’s license. So Trevor was listed on the policy as an “excluded driver.” Howard’s policy was clear that the insurance company would not pay any claim for loss or injury if Trevor was operating the vehicle at the time of an accident. But after Trevor crashed Howard’s car into a telephone pole, Howard submitted a claim and lied by saying he was driving.
After Mickey’s car was rear-ended, he didn’t feel so hot. But he exaggerated the extent of his injuries saying his neck and back hurt and went for medical treatment he knew he didn’t really need in order to get a larger settlement from the insurance company.
The transmission on Joan’s SUV was shot and mechanics told her it would cost $4,000 to fix. She couldn’t sell the SUV and still owed the bank $2,500 on her auto loan. She gave her keys to a “friend” to get rid of the SUV for her and reported to the police and her insurance company that the SUV had been stolen — so the insurance company would pay off her auto loan.
To view a TV spot from the prevention campaign that addresses the issue of automotive insurance fraud‚ click here.
To listen to a radio spot from the prevention campaign that addresses the issue of automotive insurance fraud‚ click here.
To view the billboard from the prevention campaign that addresses the issue of automotive insurance fraud‚ click here.
To download a brochure from the prevention campaign that explains the issue of automotive insurance fraud, click here.
Unfortunately‚ scenarios of automotive insurance fraud are played out all too frequently in Pennsylvania. In 2011‚ crimes involving auto insurance accounted for 51 percent of referrals received about suspected fraud. The following cases show how this crime is committed – and prosecuted – in real life.
REPORTING CAR STOLEN WHEN IT'S NOT - JUST PLAIN DUMB.
In October 2010, detectives of the Philadelphia District Attorney's Office arrested a 28-year-old Philadelphia man charging him with Insurance Fraud. It was alleged that the defendant falsely reported to Pennsylvania State Police and his auto insurer, Nationwide Insurance Company, that his 1998 Dodge Ram had been stolen from a bar's parking lot in Philadelphia on April 12, 2009. Nationwide settled the man's claim, paying off the vehicle’s loan of $5,514 and paying $1,408 for the man’s use of a rental vehicle. In October 2009, the “stolen” vehicle was recovered by Pennsylvania State Police on the property of the Defendant's cousin, who told police that his cousin had left the truck there after it had broken down some months earlier. In March 2011, the defendant was granted admittance to a rehabilitation program with one year on probation and was ordered to pay $7,308 in restitution and all court costs.
WOMAN GOES REALLY WRONG IN TRYING TO AVOID PAYING HER POLICY'S DEDUCTIBLE
On October 12, 2010, detectives of the Philadelphia District Attorney's Office arrested a 29-year-old Levittown, PA woman for having falsely reported to GEICO Insurance Company that her 2000 Mercedes Benz had been vandalized after she’d lowered her policy’s deductible from $1,000 to $250. GEICO investigators found that the dates on a Philadelphia Police report, that the woman had given GEICO, had been altered. Confronted by investigators, she withdrew her claim and admitted that she'd changed her policy and altered the police report hoping to avoid paying her policy’s $1,000 deductible. In February 2011, the Defendant was granted admittance to a rehabilitation program with 24 months probation and was ordered to pay a civil penalty of $2,500 and court costs.
DRIVING WITHOUT INSURANCE LEADS TO A WORSE MISTAKE!
In November 2010, a 61-year-old Blair County man was arrested for having purchased auto insurance, after he’d had an accident while driving without insurance, to file a fraudulent claim. The man had purchased auto insurance with GEICO Insurance Company after a March 5 accident, concealing on his application that he’d been involved in an accident, and then received over $5,000 for his damaged vehicle by claiming that the accident happened on March 8 after his purchase of insurance. Pleading guilty in March 2011, he was sentenced to serve five years on probation and was ordered to pay restitution of $5,168 and all court costs.
AUTO ACCIDENTS NOT A PAYDAY OPPORTUNITY!
In November 2010, detectives of the Philadelphia District Attorney's Office arrested two Philadelphia men, a 20-year-old man and his 47-year-old father, for making fraudulent injury claims. After his son was involved in an August 2009 auto accident with another vehicle in Philadelphia, the pair agreed to falsely tell police and GEICO and Progressive insurance companies that the father had a passenger in the vehicle when the accident happened. They’d also agreed to say that they’d both been injured. In February 2011, both were granted admittance to rehabilitation programs and were ordered to serve two years on probation, and pay $2,000 civil penalties and court costs.
On March 30, 2010, detectives of the Philadelphia District Attorney's Insurance Fraud Unit arrested a 23-year-old Philadelphia woman and her 22-year-old boyfriend for having conspired to file bogus injury claims. Driving her State Farm Insurance Company insured Mini Cooper in July 2008, the woman was involved in an accident with a vehicle insured by Erie Insurance Company. The woman conspired with her boyfriend to falsely claim that he had been a passenger in her car and to say that they’d both been injured, hoping to receive money from insurance claims. In August 2010, the young woman was admitted to a rehabilitation program with two years on probation and was fined $1,000 and ordered to pay court costs. In September 2010, her boyfriend was sentenced to serve four years probation and pay a fine of $1,000 and court costs.
Automotive insurance fraud is a serious crime. As with all other types of insurance fraud‚ Pennsylvania considers it a felony. Violators can spend up to seven years in prison and spend up to $15‚000 in fines. There are also many other associated expenses such as court costs and legal fees. Plus‚ those found guilty of insurance fraud have the stigmas and limitations of being a convicted felon to carry with them for life.
To see videos on how insurance fraud can damage people's lives, click here.
There are simple ways to avoid facing situations where there’s an opportunity for you to commit automotive insurance fraud.
First‚ it is important to make sure insurance policies are up–to–date for each motor vehicle you own‚ and that these include at least the basic types of coverage required by PA law. Second‚ you need to understand each policy‚ what is and isn’t covered‚ and to what extent. Your insurance agent can help you with these.
Learning all you can about automotive insurance fraud will help you avoid costly and life–changing mistakes. And in all aspects of your dealings with insurance companies – from applications to claims – make sure the information you provide is truthful and accurate.
To help all Pennsylvanians better understand automotive and other types of insurance fraud‚ the Pennsylvania Insurance Fraud Prevention Authority (IFPA) in 2009 embarked on a new statewide public education and prevention campaign which continues to inform consumers of the risks and penalties of insurance fraud through a variety of channels.
Click here to learn more about the IFPA Prevention Campaign.