Unpacking Auto Insurance Fraud
Here’s a scenario.
You’re driving in downtown London, Ontario on a busy, two-lane street. While you’re driving, a car passes your vehicle and merges ahead of you. While doing so, they begin tapping the brakes. Since you can’t react in time and can’t swerve safely, you hit the vehicle in front of you. There is damage to the other vehicle, so you and the other driver exchange information. Afterwards, you both drive away to file claims.
Although this may seem like a standard accident, it could actually be a case of auto insurance fraud — and you may not even know it.
In recent years, auto insurance fraud has become an increasingly large and complex issue. Even if you or someone you know has never been a direct victim of auto fraud, it has implications for everyone. Auto insurance fraud impacts all drivers in Ontario by contributing to increases in insurance premiums. According to one study, it’s estimated that insurance fraud costs the average family between $4,000 and $7,000 in increased premiums over a 10-year period
Most often, staged car accident scams lure drivers into a trap in which they cause a small accident or “fender bender.” Typically, the scammer will stage an accident in which their car becomes slightly damaged, and you are at fault for the damage. Next, they will exchange insurance information with you. However, rather than having the car repaired, the scammer will pocket the repair money
Impact of Staged Accidents
The most serious way that a staged accident can cause harm is the possibility of injuries or even worse, fatalities. Although most fraudulent accidents are only small accidents, such as a rear-ending, they can easily become more serious with one wrong turn.
Staged accidents can also cause your auto insurance rate to increase if the scammer is successful. After the scammer files a claim to fix their car, you’ll officially be considered at fault. As a result, you may see an increase in your rate for causing the accident.
Perhaps the most frustrating aspect of staged accidents is that it can be difficult to determine who is telling the truth about the accident. Therefore, it may come down to your story versus the scammer’s. Because of this unfortunate reality, many people are choosing to install dash cameras to their vehicles. This way, they’re able to view everything if an accident were to occur. This can also provide investigators with hard video evidence. Ultimately, setting up a dash cam gives your insurance company the evidence that they would need to help you fight against the fraudster, if required.
Typically, there are four types of staged accidents:
- Drive Down: In a drive down scam, the scammer will motion for the victim to move forward. When the victim does so, the scammer will speed up and create a collision.
- Panic Stop: While driving in-front of a victim, a scammer will wait until the victim it’s distracted and will throw on their brakes.
- Side Swipe: On roads with dual left turn lanes, the scammer will graze the victims vehicle and claim that they were in the wrong lane.
- Swoop and Squat: This type of accident describes the scenario that I described above. The scammer will pass the victim, merge ahead of them, and then apply the brakes.
How to Avoid Falling Victim
In most staged accidents, there are very few witnesses or concrete proof that the scammer did anything wrong — this is because most staged accidents are designed to make the victim look at fault without question.
While there are no concrete ways to stay safe, we’ve compiled a few tips for you protect yourself:
- Avoid tailgating other vehicles
- Always file a police report after every accident
- Take pictures of the accident
- Install a dash camera to capture the footage
At Haas Insurance, we work hard to protect our clients. If you’re in an accident that you suspect is fraudulent, contact us and we’ll do our best to provide you with the best advice and route of action.