Insurance fraud refers to an intentional act performed to attain payment from auto insurance companies. It is estimated that insurance fraud costs companies an annual $80 billion. Companies have a difficult time detecting fraud due to the surreptitious nature of fraud. This crime drives up the cost for all consumers in the industry.
Con artists often file insurance claims over accidents that never occurred. Auto insurance fraud occurs if a consumer submits a claim or multiple claims over a single accident that never occurred. In some cases, the person files a claim unrelated to the accident, or they misreport the loss of wages because of injuries. Some criminals register their car to a location different from their true residence because they do not want to pay higher premiums. These are all considered forms of fraud that drive up the cost for everyone.
According to Gary Stephenson, spokesman for State Farm Insurance, fraud directly influences the cost of liability insurance. He continued to say that dishonest claims exaggerate the cost that we pay, and the act of fraud itself costs the average American household an extra $600 per year.
Car insurance fraud has become big business for criminals, and it puts drivers at risk. One of the reasons for the rise in fraudulent claims is due to the economy. Studies show that fraudulent claims increase during periods where an economy is troubled.
During a study conducted by the Coalition Against Insurance Fraud, they found that 4 out of 5 Americans believe that insurance fraud is unethical. However, most people are willing to turn a blind eye if the fraud is being committed by a loved one or relative. They believe the only people affected by those actions are a faceless insurance company. Nevertheless, the actual truth of the matter is far worse. Car insurance fraud raises the premiums for everyone..