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FYI Insurance Fraud Schemes
Unscrupulous tactics can cost you plenty
There are dozens of ways that crooks take advantage of insurers and innocent drivers to cash in on fraudulent claims; here are some of the most notorious tactics.
Staged Vehicle Accidents
The "Swoop and Squat"
The vehicle in front of you stops abruptly, and you find yourself the responsible party in a rear-end collision. Only this is no accident -- the other driver planned the collision, and expects to submit vehicle damage and personal injury claims against your insurance company.
The "Drive Down"
When you try to merge into traffic or out of a parking space, the fraudster helpfully waves you ahead, then intentionally drives into you. Then, of course, the driver denies waving you on. Often there will be a "witness" nearby who claims to have seen the whole thing and who corroborates the fraudster's version.
The "Side Swipe"
In a dual left-turn lane at a busy intersection, the driver in the inside lane drifts into the outer lane, intentionally forcing a collision.
The "Hit and Run"
When an insured uses a damaged vehicle and claims to be the victim of a hit and run. The police are often called to verify the damage.
"Paper Accidents" are just that -- they occur only on paper. An owner fabricates an accident report to cover existing damage, or to collect insurance money for non-existent damage.
Application Fraud
This occurs when vehicle owners use a friend's or relative's address or misrepresent how far they drive to work, all for the sake of obtaining a lower auto insurance premium.
Personal Injury Fraud
Medical Mills
Unethical medical providers conspire with uninjured patients to create fictitious, accident-related injuries for the sole purpose of collecting on fraudulent disability, workers' compensation and personal injury claims. These providers often work through middlemen called "Cappers" or "Chasers" who recruit patients. The Capper or Chaser will usually receive a flat rate per "patient" The providers often bill insurers for multiple office visits and tests that never took place.
Workers' Compensation Insurance Fraud
An employee falsely claims a work-related injury or exaggerates the extent of a minor injury to collect workers' compensation benefits. These dishonest employees are often caught working a second job or performing activities beyond what their claimed injury would allow.
Monday Morning Injury
An employee falsely claims an injury sustained elsewhere occurred at work, in order to gain workers compensation benefits.
Property Fraud
Multiple Policies for Profit
A property or vehicle owner illegally buys numerous insurance policies on one property or vehicle and then proceeds to cause its destruction, collecting on all the policies.
Staged Auto Theft
A vehicle owner behind on payments or over the allowed mileage on a lease burns and abandons the vehicle, then reports it stolen to collect insurance proceeds.
Vehicle Export Fraud
A criminal purchases or leases a vehicle with a minimal down payment and buys insurance for it. The vehicle is then shipped overseas for sale and reported stolen to the insurance company. The insurance company pays for the vehicle; the criminal takes the profit on the sale.
Scheduled Jewelry Fraud
Fraudster collects valuable jewelry from friends or relatives, obtains appraisals and schedules the jewelry on his or her own insurance policy. The jewelry is then returned to its rightful owners and reported stolen to the insurance company.
Arson for Profit
A property owner or accomplice intentionally sets fire to an insured home or building to collect insurance benefits. Arson is a particularly egregious fraud due to the risks encountered by firefighters and police responding to the fire, and the threat to neighbors and nearby buildings.
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