In order to drive a car, you need to have an insurance policy backing you that can handle claims involving accidents and other problems that may arise. Because these claims can lead to payouts, some people take advantage of their insurance plan and attempt to commit fraud. If you are accused of car insurance fraud, a securities fraud lawyer may be able to help you fight your case.
Soft car insurance fraud is the category assigned to fraud that involves exaggeration with the goal of a larger payout. This is the most common type of car insurance fraud that occurs and can take different forms.
One way that soft fraud is committed is when a claim is submitted for pre-existing damage to your vehicle. For example, you may have a fender that was dented before you got your insurance policy. If you then submit this damage as recent, this is soft fraud. Soft fraud can also mean that you include prior damage as a part of the damage caused by an accident or say that accident damage is worse than it actually was.
Part of the reason soft fraud is so common is that it can be unintentional. Even when you are being honest and trying to provide accurate information, any soft fraud, intentional or not, can mean your premiums increase if you are found to have lied.
The much more serious form of car insurance fraud is hard fraud. This is when an auto insurance loss is caused intentionally, like a staged collision or care fire. There are enough forms of staged collisions that there are actual sub-types. Some examples include:
- A “swoop and squat” is when two cars work together to maneuver another unsuspecting driver into a rear-end collision, causing damage to their cars that leads to a payout.
- A “drive down” is when a driver lulls a victim into thinking they can safely make a left or right turn, then collides with them.
- A “jump-in” occurs when a person who was not in the cars involved in a wreck claims to have been injured, with the hopes of receiving money for medical bills.
- A replacement scam is when a mechanic claims they replaced your damaged parts with new parts, but instead used cheap parts or did not replace them at all. They then charge your insurer the full price in order to increase the payout.
In hard fraud cases, the unsuspecting person involved in the accident is a victim along with the insurance provider. If this person suffers injury or monetary losses, they can file a civil suit in addition to criminal charges in order to receive payment and restitution for the crime.
Other Forms of Fraud
One study in Michigan showed that 21% of bodily injury claims and 18% of personal injury protection (PIP) claims appeared to be fraudulent. Some types of fraud that accounted for these numbers include:
- Filing multiple claims for the same accident
- Using false car insurance information
- Falsifying information to get a lower premium
- Buying car insurance only after an accident
- False grades to qualify for a student discount
- Not adding a teen driver to the family insurance policy
These forms of fraud do not only impact the scammer and the provider. The nature of insurance is such that one person’s premium is used to offset other claims, so false claims drive the cost of insurance up over time.
Penalties for Car Insurance Fraud
The consequences for this fraud vary by state and can range in severity depending on the type of fraud.
In Georgia, insurance fraud is considered a felony with severe penalties associated. If found guilty, a person can serve between 2 and 10 years in prison and be asked to pay a fine of up to $10,000. This is in addition to being ordered to pay restitution to any victims. Civil penalties can also be imposed.
Along with insurance fraud, a number of other charges can be involved in these cases. Property damage can be common in cases of arson.
Accusations of insurance fraud can be serious and end in jail time or personal ruin. If you find yourself involved in these cases, it is important to have a skilled criminal defense attorney on your side to help you to argue your case.