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How car insurance fraud pushes up your premiums

Recent increases in car insurance premiums reflect an epidemic in car insurance fraud. Experts think this fraud costs consumers and insurers up to ?5 million pounds a week. This converts into an increase of approximately ?44 on each policy, since insurers have to pass on increased costs to us, their customers. This guide looks at ways to avoid being a victim of the,” accident scams,” which are being widely reported in the press and ways in which fraudulent claims are detected.

Small Time Car Insurance Fraud

Car insurance fraud mainly comes in two kinds. The most common variety involves scams such as, “padded claims,” where extra items are added to those damaged in an accident. These additional amounts are often detected when insurance companies look at the statistics for similar accidents, and flag a claim as unusually high. This process is carried out by computer and may result in a manual examination and denial of a claim.

Results of Inflated Claims

Any deliberately misleading information given to insurance companies constitutes fraud. In some cases, the claimant will loose coverage and have difficulty getting another insurer to accept them, or find they will be paying much higher premiums, for years to come. They may also risk criminal charges and severe problems obtaining credit.

Big Time Car Insurance Fraud

The second form of fraud is still under investigation by a group of insurance companies and involves a dangerous practice of which all drivers need to be aware. The recent upsurge in ‘car crash fraud,’ involves innocent motorists who find themselves the victims of unscrupulous gangs who induce accidents, then make inflated claims.

How Car Crash Fraud Schemes Work

Gangs of criminals pick busy roads, often roundabouts or motorway slip roads, to choose their prey. Their vehicles are usually older cars and vans, but a recent trend for using better quality cars has been noted. These vehicles are full of passengers who may later claim for fictitious injuries, all on your insurance policy.

The Sequence of Events

The sequence of events varies, but the basic pattern involves an unsuspecting motorist who is behind a vehicle that brakes sharply and suddenly, (usually with no warning from brake lights, as these are disabled) resulting in a minor accident. The criminals count on the shock and concern of legitimate motorists to miss the cues that they have been set up. These include the passengers of the car in front looking around at their target, a gesture that could be interpreted as a wave on, on the part of the driver in front, and a vehicle that looks suspiciously old and spruced up for its part in the drama.

How to Avoid Being a Victim

Following distances are hard to maintain in heavy traffic, but give a suspicious looking vehicle as much room as possible, especially if their brake lights seem to be out. A last resort is to pull over and wait for a time, to allow the criminals to move on. If a driver waves you on and you have the slightest reason to believe it may be part of a scam, ignore the signal and get away from the vehicle by turning off the road or parking as soon as is safely possible.

Contacting Insurers

If you are involved in an accident that seems suspicious in any way, contact your insurers giving your reasons. After any accident, try to reconstruct the sequence of events as soon as possible, for example, while awaiting arrival of the police. Make a written record of events and be aware that passers by may also be members of the gang involved, as well as witnesses.
 

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