Auto insurance fraud may not be one of the more popularized kinds of fraud, but despite its lack of glamour it is still a serious issue in society. In fact, there are multiple types of auto insurance fraud that happen regularly and cost the industry millions of dollars every year.
Hard Auto Insurance Fraud
The most serious type of auto insurance fraud is known as “hard” fraud. This type of fraud is direct and it is deliberate and it involves taking serious actions to bilk insurance companies out of money.
Some examples of hard auto insurance fraud include staging a car theft to collect the insurance money, setting up a motor vehicle accident or even slamming on your brakes so the car behind will rear-end you. Naturally, the end result is an insurance claim and payout, even though a crime was committed in order to get it.
Soft Auto Insurance Fraud
“Soft” auto insurance fraud happens far more often than hard fraud, but there are also fewer physical injuries and the penalties are less severe. When committing soft insurance fraud, you might have a legitimate accident but file inaccurate claims. This may include filing more than one claim for the same injury or exaggerating the amount of damage that occurred to your vehicle.
Other examples of soft car insurance fraud include falsifying lost wage reports that resulted from the accident and bumping up repair totals from your mechanic. Even providing false information on your auto insurance policies to try and get lower rates is considered a form of soft auto insurance fraud.
The Aftermarket Add-On
Getting “extras” added to your vehicle after you buy it isn’t anything unusual. You may outfit it with new rims, a new shifter or steering wheel, or special detailing. However, did you know that if you’re in an accident and your insurance company pays out the amount on your original policy, but you remove any of those aftermarket add-ons, you’re technically committing auto insurance fraud?
Sounds pretty confusing, doesn’t it? Car insurance fraud covers many different definitions, and the specific definitions may differ depending on where you live. Intentionally committing hard or soft auto insurance fraud is one thing, but getting involved in a situation like the aftermarket add-on scenario when you didn’t even mean to is totally different.
When you call about an auto insurance policy, be sure to mention fraud and one of our experts will explain everything you need to know, so you have all the information you need. Auto insurance fraud is serious stuff, and auto insurance policies are often confusing, so we’re here to help!