Automobile Insurance Fraud

Automobile insurance fraud is a fairly widespread occurrence, and there are a wide variety of ways someone can commit it, most of them knowingly. There are two classifications in which auto insurance fraud is categorized: hard and soft car insurance fraud. Auto insurance fraud is committed in order to save the offender money on their auto insurance bills, and in doing this scamming insurance companies out of money. It is estimated that about one out of every five insurance claims is fraudulent in some way.

The more minor type of automobile insurance fraud is labeled as soft. This type includes filing multiple claims for a single injury or accident, attributing injuries to automobile accidents that did not occur in a car, and intentionally over-estimating money lost from missing work as a result of an accident. One of the few types of automobile fraud that may not be the fault of the insured person is reporting a higher repair price for an accident than it really cost. This is because it is sometimes fraudulent actions by the repair shop that results in this price inflation. However, this is also one of the most common types of soft automobile insurance fraud, since it might just be the easiest to commit.

Hard auto insurance fraud is the major type of fraud, which includes full-fledged crime rings designed to make tons of money off of insurance companies. Examples of this kind of car insurance fraud contain set-up automobile accidents, making up injuries that weren't actually obtained, and filing for money for medical treatment that was never administered. In addition to those is illegal registration. An example of illegal registration is when a driver that lives in a major city goes and registers his vehicle in a rural area and sends that information to the insurance company. Since insurance rates are usually higher in cities than in the country, the perpetrator saves money, albeit fraudulently.

Since automobile insurance fraud is such a problem in today's world, an auto insurance fraud penalty will generally be fairly severe. This fraud is considered criminal activity, and will go on one's criminal record if found guilty, harming their chance of finding a job along with other complications in the future. Also, a prison sentence is guaranteed in every state for insurance fraud. The minimum and maximum time in jail varies depending on the severity of the crime and what state the crime was committed in. The most obvious penalties to getting caught making a fraudulent claim are higher insurance rates and very hefty fines.

So one might ask, How do I avoid automobile insurance fraud? Since some fraud is unintentional, it may seem hard to avoid, and the severe punishments might scare some people out of filing a claim with an insurance company at all. But the key is to be as honest and un-biased as possible as far as reporting damages go. As long as a person does that, they will stay clear of the penalties.

Overall, car insurance fraud is a growing problem in society today. There are different types of fraud (hard and soft), and penalties are increasingly more severe as the intensity of the crime escalates.