Non-profit sites like the Coalition Against Insurance Fraud (CAIF) report that auto insurance fraud costs a staggering $12.3 billion or more a year. The worst part is that this cost is passed along to consumers, most of whom would never consider committing insurance fraud themselves. Instead, they find themselves paying up to hundreds more annually on their premiums. Money paid by insurance companies for fraudulent insurance claims add to the companies’ annual loss, a statistic that is always used to establish future rates. And in the auto insurance industry, fraud is one of the major cost components increasing the price of insurance for consumers.

Auto insurance fraud often involves staged accident rings and the filing of one or more fraudulent accident claims. This can include staged accidents in which the drivers of two or more vehicles intentionally collide, or accidents caused by con artists (involving you in a wreck that is made to look like your fault). Auto insurance fraud can also be performed by auto repair shops or mechanics that bill for unperformed work or parts. Or by individuals who do get in a wreck and claim the loss of more property than was actually in the car, charge for repairs and/or damage that was not due to the current accident, or report fraudulent injury claims of passengers. There also exists in the industry what is known as a “paper claim,” which involves an accident that never actually happened and only exists on paper. Organized accident rings often find others in the community to participate in the creation of accidents for a cut of the payout. For this reason, be wary of any unasked-for referrals to places such as repair shops, law offices, or health care facilities/doctors if you are in an accident.

Staged accidents or fraudulent auto insurance claims usually follow these basic schemes:

• Stopping suddenly for no apparent reason
• Disregarding the right-of-way intentionally, or giving up the right-of-way on purpose
• Reporting passengers who were not in the vehicle at the time of the accident, and/or witnesses that were not actually on the scene
• Claiming excessive bodily injury not commensurate with vehicle damage
• Claiming property that was not in the car at the time of loss
• Falsely reporting a car as stolen
• Fake hit-and-run claims
• Destroying a vehicle by setting it on fire

To protect yourself against being a victim of these auto fraud professionals, be sure to drive carefully and be aware of the traffic around you at all times. Do not follow cars too closely, watch traffic in other lanes, give yourself plenty of room when pulling into traffic or changing lanes, and carefully examine any accident reports and repair shop bills if you are involved in an accident. Always make sure to call the police if you are in an accident so that you have an accurate and verified accident report.

For more information on insurance fraud, visit www.insurancefraud.org. If you have reason to suspect insurance fraud in any form, please call the National Insurance Crime Bureau at 800-TEL-NICB. The National Association of Insurance (NAIC) also has an antifraud task force; information about this can be found at www.naic.org.