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What is Auto Insurance Fraud? |
Auto insurance fraud occurs when people knowingly misrepresent pertinent facts to a company or agent to obtain a policy or collect money to which they aren’t entitled.
There are many types of fraudulent schemes and scams, all of which increase premiums for policyholders of auto, life, health, homeowner’s and other types of insurance. Insurance fraud can be “hard” or “soft.”
Soft fraud occurs when normally honest people knowingly misrepresent facts on insurance applications or “pad” a claim with damages and injuries that never occurred. Some examples:
· Understating the annual number of miles driven on an insurance application to reduce insurance premiums.
· Reporting to your agent or company that a car is principally garaged in New Jersey when it is garaged elsewhere.
· Adding damages to a claim to cover the cost of your deductible or prior premiums paid.
· Omitting high-risk drivers from your application or policy.
Hard fraud occurs when an accident, injury, theft or other loss is deliberately staged, either by a lone person or as part of an organized fraud ring. These rings often join dishonest doctors, lawyers and repair shop owners in snaring innocent drivers with a staged collision that appears accidental. Some examples:
· A driver stops abruptly in front of your vehicle, causing you to rear-end it. In addition to collecting money for vehicle damages, the “crash dummy” also submits a claim for nonexistent injuries to collect more.
· A vehicle is found abandoned and burned before it is reported stolen by its owner.
· A fraudster obtains insurance on a vehicle using a counterfeit title and registration. Later, a theft claim is filed on the “paper car.”
Any form of auto insurance fraud is a serious crime in New Jersey that can lead to heavy fines and possible jail time. Protecting yourself from fraud scams is one way to help fight this crime. For information about the Department’s education awareness programs, call (609) 292-5064. If you have specific information about individuals or entities that may be committing insurance fraud, contact the New Jersey Office of Insurance Fraud Prosecutor at 1-877-55-FRAUD.