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Auto Insurance Companies and Bogus Claims

Auto insurance companies and bogus claims on auto policies come into contact with one another more often than you might think. After many decades of being victimized by fraudulent claims from their customers, the industry is adept at sorting through and spotting suspicious looking claims activity. As auto insurance fraud continues to become more sophisticated and more widespread, so too have insurers become better organized and better prepared in their efforts to spot a false claim. A list of red flags known as suspicious loss indicators help those in the industry discover and root out fraud.

Auto Insurance Suspicious Loss Indicators

Suspicious loss indicators are a handy list of signs that fraudulent claims activity could be going on. In all, the industry has developed over twenty of these indicators in use among all major insurers. Many of these indicators are common sense type things, but others require some additional investigating on the part of the insurer. For example, a lack of police reports and a history of loss claims are both on the list. But so are high debt and financial distress as revealed by investigators through forensic accounting. That's right: when you file a claim with your auto insurance company, you could get investigated just like an ordinary criminal as part of the process.

Auto insurance providers have a host of different options for ways they investigate claims and claimants, from highly advanced computer software to specialists who review files to detect red flags. The insurance industry has many decades of experience in detecting fraudulent activity, so even as organized fraud rings are on the rise it is still evident that the chance of an average person pulling one over an insurance company is not very good.

Insurance Fraud in the U.S.

The cost of insurance fraud is a huge problem across all industries in the United States, including auto insurance. The trouble for all of us who are innocent of this crime is that we all end up paying for it. Because insurers have no choice but to base their pricing on demographic data, those who have never filed a fraudulent claim get lumped in with those who have, and all those losses get rolled into the amount that the companies have to recapture with the premiums they charge. By some estimates car insurance fraud costs individual policy holders several hundred dollars a year.

One of the ways people try to defraud car insurance companies is to try to destroy or otherwise get rid of their unwanted cars and then make a claim on them. There are many red flags that go up in the investigation of theft and car fire claims. Recovered thefts where the car showed no sign of forced entry are always a source of suspicion. Car fires in which there is no natural point of origin, no personal property left in the vehicle, or the presence of multiple separate fires or unusually high rates of combustible materials found all point to intentional arson committed in all likelihood by the car owner. People sometimes commit acts like these in order to get out of damaged vehicles they can't afford to fix or cars they are upside down on or behind paying for. But the insurance industry has seen it all, and there is nothing we can cook up that will new to fraud investigators.

Injury Claims and Auto Insurance

Injury claims are another huge source of losses for free car insurance quotes providers. By all means, there are plenty of completely legitimate claims that are made following car accidents where the claimants really did receive serious injuries. But a growing number of claims are arising in certain parts of the country where if the claim is ever actually investigated, the claimant can be found to have falsified the injury. Sadly, doctors and medical clinics and even ambulance drivers and medics have been caught taking part in fraud rings of ever increasing complexity. With personal injury harder to substantiate than auto damage, this is an area of fraud that more criminals are getting into.

It is important to note that insurance policy holders should not be afraid to submit a claim even if they find that their cases features one or more of these suspicious loss indicators. Just because one is present does not mean your claim will be denied. It just indicates that the case should be examined in more detail on the insurer's side. Auto insurance providers do not want to pay out on fraudulent claims, because doing so hurts everybody. It obviously costs them a great deal of revenue, and forces their hand into raising rates, which hurts customers. Bogus auto insurance claims are something car insurers take very seriously. It is not worth it to try because in all likelihood, you'll get caught.


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