Information provided by Insurance Information Institute and distributed as a courtesy of: Barrett R. Smith President of Auto damage Experts

In receiving my annual auto insurance renewal recently I found whereas my insurance

premiums on my three vehicles had increased over last year’s! I was very disappointed

and felt that because I had no losses (for over a decade) and my vehicle’s were worth

less than the prior year, that my rates should have went down…not up!

So I called my insurance agent and questioned the increase and was advised that

although the value of my vehicles indeed went down and my driving record was great I

was told that rates went up for everyone due to the increase in fraudulent claims over the

past year. As such, and wanting to be a part of the solution, I decided to share the

following with all those I could.

If you have been involved in an auto accident that just didn’t feel right, it might not have

been an accident at all. More and more criminals are devising elaborate staged vehicle

accidents — complete with fake injuries — to collect on insurance policies, according to

the Insurance Information Institute (I.I.I.). Not only can these staged accidents cost

honest policyholders and auto insurers billions of dollars annually, but they create

unsafe conditions on roads and highways — particularly when the scheme goes wrong.

“Staged auto accidents are a dangerous criminal activity that

targets innocent drivers with increasingly bold schemes

aimed at defrauding insurance companies,” said Loretta

Worters, vice president with the I.I.I. “Not only do honest

policyholders ultimately end up paying more for auto insurance, but those committing

the fraud can cause serious injuries or death.”

Staged accidents aren’t the only way to defraud consumers. Fraud may be committed by

a number of different parties involved in an insurance transaction: applicants for

insurance; policyholders; third-party claimants; and professionals who provide services

and equipment to claimants. In addition to staged accidents, common fraud practices

include “padding,” or inflating actual claims; misrepresenting facts on an insurance

application; and submitting claims for injuries or damage that never occurred, services

never rendered or equipment never delivered.

Fraudulent automobile accidents occur more frequently in urban areas, where there is a

greater number of vehicles, and in wealthier communities because drivers there are

perceived to have better insurance coverage, the National Insurance Crime Bureau

(NICB) noted. Criminals often target new, rental or commercial vehicles because they are

typically well insured. Furthermore, criminals tend to prey on women driving alone and

senior citizens since they are perceived to cause fewer problems and are less likely to be

confrontational at accident scenes.

Such organized scams are especially common in states that have so-called “no-fault”

auto insurance, a term used loosely to denote any auto insurance program that allows

policyholders to recover financial losses from their own insurance company, regardless

of fault. Twelve U.S. states have no-fault auto insurance laws, with Florida topping the

list of no-fault states with questionable claims involving staged accidents.

The best defense against becoming involved in a staged accident and auto insurance

fraud is to know what to look for. According to NICB, here are some of the more common

staged accident scenarios:

1. Swoop and squat: Usually involves three vehicles; two are driven by criminals, the

other is the victim. The driver of the “squat” vehicle positions his vehicle in front of the

victim’s car. The driver of the “swoop vehicle” pulls ahead of the squat vehicle and

internationally cuts it off, thus causing the squat vehicle driver to hit his breaks. The

victim cannot react in time and rear ends the squat vehicle. The swoop vehicle races off

and is not seen again. The innocent motorist states the swoop vehicle caused the

accident, but because that driver cannot be located, the victim has to pay the vehicle

damage and personal injury claims of passengers in the squat vehicle.

2. Side swipe: Typically occurs at busy intersections with dual left turn lanes. The

criminal positions his vehicle in the outer lane. As soon as the victim’s vehicle drifts into

the outer turn lane, the criminal side-swipes it.

3. Panic stop: Here the criminal typically drives an older vehicle filled with passengers.

The criminal positions his car in front of the victim’s while a backseat passenger in the

criminal’s vehicle watches and waits for the innocent motorist to be distracted, for

example, by a cell phone call. As soon as the victim is distracted, the driver slams on the

brakes, causing the innocent motorist to rear-end the criminal’s vehicle. The victim’s

insurance company must pay for vehicle damage as well as injuries that the passengers

may claim to have suffered from the accident.

4. Drive down: In this scheme, the victim merges his vehicle into traffic after being

motioned to do so by the criminal. As the innocent driver begins to merge, the criminal

speeds up and causes a collision. When questioned, the criminal denies motioning the

victim to merge into traffic or gives excuses.

Here are some warning signs that fraud is being perpetrated:

1. People who suddenly appear at an accident scene and try to direct you to specific

doctors and attorneys — these so-called “runners” are usually part of the criminal

scheme as well.

2. Physicians who insist you file a personal injury claim after an accident, especially if

you are not hurt.

3. Tow trucks that arrive on the scene without anyone having called them. These tow

trucks might be working in concert with unscrupulous medical or legal providers.

If you have been in such an accident and suspect fraud:

1. Call the police or highway patrol. Trust your instincts. Let the police know you suspect

fraud. Obtain a police report with the officer’s name, even if the damage is minimal. If the

report describes damage to the claimant’s car as a “nick,” it is harder for criminals to

intentionally damage the car later and try to collect a larger claim against your insurance

policy.

2. Contact your insurance agent or company representative as soon as possible,

regardless of who is at fault. Even if the accident appears minor, it is important that you

let your insurance company know about the incident. Let them know you suspect fraud

and why.

3. Call the NICB’s toll-free hotline at 1-800-TEL-NICB (1-800-835-6422). Your call can be

anonymous and could be eligible for a reward.

The I.I.I. also recommends taking notes and photos at the scene of an accident. This will

make the claims process easier and provide a record of the accident in event there is a

fraud investigation. Keep a pad and pencil in your glove compartment in order to note

the following:

* The names and addresses of all drivers and passengers involved in the accident;

* License plate numbers;

* Make and model of each car;

* Drivers license numbers;

* Insurance identifications;

* Names and addresses of witnesses;

* Names and badge numbers of police officers or other emergency personnel.