Sunday, October 3, 2010

Car Insurance Fraud Involving Staged Accidents and False Claims

According to the non-profit Coalition Against Insurance Fraud (CAIF), insurance fraud costs Americans upwards of $80 billion a year. Contrary to popular belief, this money doesn’t come out of the Scrooge McDuck-like vaults of billion dollar insurance companies, it comes out of every law-abiding American’s checkbook in the form of higher insurance premiums to cover the fraudulent claims. The CAIF says that the $80 billion annual bill amounts to nearly $1000 per family!

Around 16 percent of all insurance fraud is auto-related. Most car insurance fraud comes in the form of unethical repair shops billing for work that was never actually performed, or individual claimants who inflate reported damages or attribute previously existing car problems to the accident that inspired the claim. While these forms of insurance fraud are both immoral and illegal - they could land you in jail - even more insidious is the fraud perpetrated by staged accident rings, who not only put Americans in financial peril, but also in mortal danger.

What is a Staged Accident Ring? How Do They Operate?

A staged accident ring is a group of criminals who conspire to defraud auto insurance companies. Far from being Robin Hood-like figures, they essentially steal the most from the poor - who almost always pay a higher percentage of their income in insurance premiums than the rich - and give to themselves. Worse yet, members of staged accident rings put innocent strangers in mortal danger by deliberately causing auto accidents.

For example, a pair of criminals start off in separate cars. One of them pulls out in front of you as you drive and proceeds to drive rather slowly. A few blocks away, the other criminal is waiting. He pulls his car out in front of his co-conspirator, who then slams on his breaks. You rear-end the cretin in front of you as his partner drives away, pretending to be oblivious to the entire incident.

Since you rear-ended the fraudster, you are considered to be at fault. The criminals normally have auto repair shops on their team who will grossly inflate repair bills so that they can share in the profits. Worse yet, some staged accident fraudsters fake injuries, or even intentionally injure themselves so that they can sue you for “pain and suffering.”

Ways to Protect Yourself From Dangerous Fraudsters

The most important thing you can do to protect yourself from being involved in a staged accident is to drive cautiously - more specifically, allow adequate distance between yourself and the car in front of you.

The actual amount of distance that should be kept between you and the next vehicle depends on how fast you are driving. Rather than meters or feet, seconds are the best measurement, and auto safety advocates recommend that you stay at least three seconds behind the car in front of you.

For example, watch the next vehicle as it passes a traffic sign - do you pass it three seconds later? If you’re only one or two seconds behind them, you need to allow for more distance. Doing so will make it extremely difficult for a staged accident ring to target you, and after all, protecting yourself against staged accident rings isn’t only a matter of saving you money on car insurance - it may be a matter of life or death.

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