Auto Insurance Fraud on the Rise: A Sign of Bad Economic Times?

Posted in Auto Insurance

October 29th, 2009

A recent report from the California Department of Insurance (CDI) shows that auto insurance fraud in the state is on the rise. In fact, from 2007 to 2008, there was a 25 percent leap in fraudulent claims, some of which include inflated damages and arson, as well as fake vandalism, hit and run accidents and auto thefts.

Statistics from the CDI Report

The CDI report revealed the following information regarding recent auto insurance scams:

• Suspected arson cases increase: In 2008, the CDI received 451 referrals regarding suspected arson cases, whereas in 2007, the department received 244.
• Increase in suspected theft fraud cases: The CDI received 200 more suspected theft fraud cases in 2008 than 2007.
• Actual arson cases increased: In the report, actual arson cases for 2008 had increased 25 percent from the previous year.

The department’s commissioner warns scammers that these numbers don’t indicate an ability to get away with the crime. The state is cracking down on anyone who attempts fraud on California car insurers.

Is the Economy to Blame?

We all have heard stories about how much the state of California is struggling. Numerous government programs have lost their funding, unemployment is at a 70-year high, and thousands have lost their homes, some of whom were forced live in tent cities.

With speculations that bad economic times can result in higher crime rates, you have to wonder whether California’s bad economy could be related to the increase in California auto insurance fraud?

The answer is yes … no … maybe. There are reports of crime-rate increases during tough economic times; however, other reports show that these crimes are usually committed by potential criminals. Most people find other ways to stay afloat.

This means, if you’ve been thinking about setting your car on fire to help replenish loses to your 401k, you’ll have to go back to the drawing board. Committing fraud is never excused, no matter how hard times get for you. So your best bet is to look for ways to save on auto insurance and find safe investment and savings options like everyone else.