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
EXAMPLES
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.
ACTUAL CASES
Unfortunately‚ scenarios of automotive insurance fraud are played out all too frequently in Pennsylvania. In 2008 alone‚ more than 1‚000 complaints were received about suspected fraud. The following cases show how this crime is committed – and prosecuted – in real life.
MCKEESPORT COUPLE CHARGED WITH INSURANCE FRAUD
A couple were changed with defrauding insurance companies of $69,000.
Thursday, April 24, 2008
A Mckeesport couple were arrested yesterday and charged with defrauding insurance companies of $69,000 in inflated accident claims.
[The couple] have been charged with five counts of insurance fraud, three counts of theft by deception and criminal conspiracy.
An investigation by the state attorney general's insurance fraud section revealed that the couple submitted claims for 11 accidents and sometimes more than one claim for the same accident.
The couple reported accidents in which one of them ran a vehicle into a parked car, stairs, a utility pole and trees, including one on their driveway, according to the attorney general's office.
The couple also sought medical treatment after each of the reported accidents and submitted claims to their insurance companies for doctor's appointments that they did not show up for, according to the attorney general's office. Both couples received multiple prescriptions for the painkillers Vicodin and Percocet, authorities said.
OWNER ACCUSED OF PUSHING CAR OVER BLAIR COUNTY CLIFF
The owner of a 2004 Ford Mustang faces fraud charges after reporting his car stolen and allegedly selling items from it on eBay. The police found the car at the base of a mountain.
Friday, December 28, 2007
The Police came across a 2004 Ford Mustang at the base of Wopsononock Mountain in Blair County on the morning of April 19, a few hours after the defendant allegedly pushed it over a cliff and only about an hour after he reported it stolen.
The state Attorney General's Office has charged the man with insurance fraud and two other third degree felonies for trying to claim about $26,000 for the car and its contents.
Investigators with State Farm were the first to notice that something was amiss in his insurance claim. Items from the supposedly stolen car turned up on eBay being sold by the defendant. Police determined the items were removed before the car crashed down the mountainside.
"I don't know if people watch too much 'Magnum P.I.' or what, but cars don't just spontaneously combust if you push them off a cliff. They end up in a pile at the bottom," said Nils Frederiksen, spokesman for Attorney General Tom Corbett.
MAN CHARGED WITH FRAUD, SETTING OWN SUV ABLAZE
A 57-year-old Erie man has been charged with arson and insurance fraud and is accused of setting his own vehicle on fire.
Monday, December 10, 2007
A 57-year-old Erie man has been charged with arson and insurance fraud and is accused of setting his own vehicle on fire, Erie and Millcreek Police said.
[The defendant] told police that someone stole and then set fire to his 1996 Ford Explorer in the 2000 block of Powell Avenue on Oct. 20. Millcreek police Sgt. Scott Heidt and Erie police Lt. John McCall investigated the case.
McCall said [the 57-year-old Erie man] later admitted to setting the car on fire because he could not afford car payments.
[The defendant], who was also charged with theft by deception, tampering with or fabricating physical evidence, unsworn falsifications to authorities, and making a false reports, is in the Erie County Prison in lieu of $10,000 bond.
CONSEQUENCES
Data from the Rand Institute for Civil Justice notes that more than one–third of people hurt in auto accidents exaggerate their injuries. It is this kind of dishonesty that makes us all victims of insurance fraud. Nationally‚ it is estimated fraud involving motor vehicles costs an estimated $58 billion a year. One study estimates this crime adds as much as $200 to the average annual cost of auto insurance.
This is why automotive insurance fraud is such 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.
PREVENTION
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) has embarked on an informative and aggressive statewide public education and prevention campaign.
Click here to learn more about the IFPA Prevention Campaign.