The following is a series of facts and stories about insurance fraud. It is a bit of a collection of stories from my life in the insurance world and what I have seen. Many people are wondering what the penalty is for insurance crimes and what are the chances or getting caught. It is more a series of ideas linked into one major post. Let the headers be your guide for this insurance post.
This post will talk about insurance fraud penalties, the morality of insurance fraud and the chances of getting caught. It also has some stories. I used to work in the insurance industry so even though I am not an expert I do have the insider’s perspective. I am a very moral person, I hope and do not recommend trying to convey any false information to any insurance company.
Auto insurance fraud
One quarter of the drivers could have invalid insurance. 26% of UK of the drivers in the UK have an auto insurance information that was reported and is false. This means if they are found out, their auto insurance could be invalid. The most common things that car owners lie about are their the mileage, what that they do, where they live, past claims, where the car is parked, and of course points on their license. Cutting corner, pun intended seems innocent until you are caught. Auto insurance companies have huge departments set up just to investigate these types of things. It seems innocent but what it does is puts drivers in insurance risk categories that are lower than the rest and therefore unfairly gives these car owners discounts on auto insurance. They are usually not found out unless, there is a car accident and an insurance claim detective looks deeper into the insurance policy for some reason. And certainly this auto insurance fraud is not on the same scale as other types of Auto insurance fraud. But it is a form of fraud.
Have you heard of the company names of Citizens Insurance, Meridian Insurance and Nationwide Mutual Insurance? Well here is the problem, a man in Grand Rapids was selling computer generated auto insurance policies for a $40 dollars a policy. He knew something about I would imagine Photoshop and scanning and created an auto insurance scam that milked about 500 people out of $40 dollars. First, I think the guy must be an idiot, he sold the insurance too low and this tipped people off as people started talking about this as a shady deal. Second, he sold this in his own back yard, and therefore, the community talked. Third besides moral reasons for not doing this, auto insurance scams can land you in jail for a while. He put up fliers around his house to sell the scam auto insurance. I imagine he was desperate for cash. What I do not understand is why such a talented man, talented enough to fool 500 people would not use his skills in a productive legal way instead of scamming people out of $40. All things considered though his scam auto insurance documents looked quite real.
Insurance fraud fails because:
Insurance scammers are poor planners. That is it. The people committing insurance fraud are in an economic trouble. They are in this trouble because they do not know how to manage their own personal finances. These type of people are poor planners. And hence they when they plan an insurance fraud they are poor planners also. They act our of desperation.
Fraud equals guilt and people want to get caught – People commit insurance fraud are good people gone bad. They have a moral conscious but want to do something bad, maybe on time. They are rarely professional crooks. Therefore at some level they want to get caught.
Insurance companies do not take these cases lightly they take them to court. Insurance companies have large sums of money and lawyers to get dishonest people. Insurers have 100s of years of experience finding these guys and in my opinion usually do and come down hard to act as a warning.
Fraud of any kind is immoral and not the way to make money
Why I think insurance fraud is stupid. Because in live ‘virtue is its own reward.’ I have never known a rich insurance crook. But I have known many rich hard-working people including working for insurers.
Classifications of types of false claims
Auto insurance fraud penalties fall in two four classifications, hard, soft, free from injury, and injury. An example of hard car insurance fraud is if you intentionally stage an accident such as to collect a claim. And example of a soft would be if you exaggerate your claim on a legitimate accident. It is estimated about 25% of people do this. So it is very wide spread.
Car insurance fraud penalties
Now the law has separate penalties depending if there was any bodily harm. If there is no bodily hard 10 years is the maximum jail time, but if there was you can get 20 years. Again this all depends. Most people get a fine for their penalty, however, it is a crime and goes on your record. Virginia and Oregon do not classify it as a crime. The average criminal penalty, I do not know, maybe 10,000 dollars. But this is a guesstimate. But really do you want to destroy your life by doing something like this?
Motives for the cheats
The motives for fraud are clear, it’s a financial crime. People can not pay the bills. They figure stealing from an insurance company which is big and greedy is no great moral wrong and no one will miss the money. However, even if the company is big and greedy it is still wrong.
How people get caught by an insurance company
Fraud units at insurance companies are experts. But the reason people get caught are for obvious reason. People make stupid mistakes. However, as a word of warning, I worked in the insurance industry for years, they have very good trick for finding fraud. They are very clever. So please do not consider it. If you want something to think about think about the Auto insurance fraud penalties.
Auto insurance fraud investigation limit
The purpose of this post is to tell you about the least claim limit for investigation for fraud. Usually Auto insurance companies do not investigate claims under $1,000. Therefore, a lot of claims that are called ‘paper claims’ are under this $1,000 investigation limit and not arouse suspicion.
Car insurance investigation
I am an honest person. I do not have a criminal mind. I would recommend anyone reading this post on auto insurance fraud investigation limit thinking of scamming a car insurance company not to. Why? I have worked for insurance companies and although they do not caught everyone many people get bonuses on how many people who are frauding them they can get, including from time to time claims under $1,000.
There is no end to falseness
One tactic used by scammers is to pay a false witness. A witness will stand in the staged accident and wait for the police to arrive. If this is an all cash deal and the slammer and the false witness to not have any traceable ties to each other than it is very hard to catch someone on this. The insurance company’s fraud unit will obviously look for any connection between the witness and the false claimant. If these are really well planed accidents could be anything from hit and run or sideswiped etc. I think hit and run is very common for anyone planning insurance fraud. However, often others must be involved, like doctors or chiropractor (who often had a bad reputation when it comes to claims).
In my opinion insurance fraud and bearing false witness is morally wrong. I am not telling you how to do a scam, rather, what people do based on what insurance companies find out about people who scam. If the people doing the scam do this more than once they will get caught. I think if it is planned and only a one time thing they may or may not get caught and punished for their insurance scam, wrong doing.
Story 2 of someone trying to get money from an insurance company wrongly
I am 100% against insurance fraud. I think it is stupid and immoral. However, I heard one person who planned a small time fraud and I do not know if to this day he got caught. What he did was had a car with serious problems. 1000s of dollars needed for repair. He had a good auto theft insurance policy.
How he committed insurance fraud
He hired a guy from the city to steal his car. He went to the movies on a date with just some girl. Some honest random girl. When they came out of the movies the car was stolen. Of course by some guy he hired. The insurance company paid and he got a new car. The date was a witness to his fake shock etc. And everything was air tight. Insurance fraud that worked. See the only problem with this story was he did something morally wrong. He got a new car but at the cost of other policy holders who pay premiums. I think what upsets me about car insurance fraud is that other people have to pay for it.
One quarter of the drivers could have invalid insurance. 26% of UK of the drivers in the UK have an auto insurance information that was reported and is false. This means if they are found out, their auto insurance could be invalid. The most common things things that car owners lie about are their the mileage, what that they do, where they live, past claims, where the car is parked, and of course points on their license. Cutting corner, pun intended seems innocent until you are caught. Auto insurance companies have huge departments set up just to investigate these types of things. It seems innocent but what it does is puts drivers in insurance risk categories that are lower than the rest and therefore unfairly gives these car owners discounts on auto insurance. They are usually not found out unless, there is a car accident and an insurance claim detective looks deeper into the insurance policy for some reason. And certainly this auto insurance fraud is not on the same scale as other types of auto insurance fraud. But it is a form of fraud.
Car insurance fraud is on the increase
There has been a 33% increase in the number of insurance fraud cases being pursued in the last year. BMWs and Saabs are being abandon, burned or hidden and these are
being found by insurance fraud claims investigators for insurance companies.
Many Americans are taking their cars to Mexico and abandoning them there.They then make false statements to the Police, which is considered a felony.
Debt is increasing auto fraud
The reason for auto fraud is obvious, people have credit they can not pay. In fact when investing suspicious claims auto insurance fraud agents take into account thefinancial conditions of suspect. If you find a person desperately in debt, there is your motive.
It is interesting to note that fraud is worst in places like LA or Nevada where the economic crisis is the worst. I do not know the percentages of convictions insurance companies get. If anyone knows concrete percentages please let me know. There is 1) fraud 2) accusations 3) convictions. I would be curious what the percentages on each are.
This post was a lot of posts cut and pasted together. Let me know your thoughts and if anything struck you or it was way off base.