Don’t Accidentally Commit Auto Insurance Fraud
While there are definitely people out there willing to commit auto insurance fraud at the drop of a hat, most law-abiding citizens have no intention of doing so. Of course, this doesn’t mean that taking part in fraud couldn’t happen since some people do it accidentally.
If you want to avoid this act and the repercussions that come with it, take time to look at how people accidentally commit auto insurance fraud.
What is Auto Insurance Fraud?
Auto insurance fraud takes place when a person provides false information to an insurance company while signing up for a policy or when filing an auto insurance claim. It also occurs when policyholders create false scenarios in order to make a false claim.
This type of fraud is broken into two categories:
- Hard fraud: Hard fraud occurs when someone intentionally plans a scenario like a collision, theft or fire to create damage or even fake injuries. Fraudulent acts like the one attempted by the Chen siblings who were caught on YouTube or these auto insurance fails fall into this category. Other auto insurance fraud cases could include a massive insurance ring run by multiple people and resulting in hundreds of thousands in losses.
- Soft fraud: Soft fraud (also known as opportunity fraud) occurs when a person exaggerates information while signing up for an insurance policy or exaggerates/fails to provide correct information when filing a claim.
Soft fraud is much more common and sometimes even occurs accidentally. Of course, if you can help it, you don’t want to commit soft fraud either, which is why it’s good to take the right steps to avoid doing so at all costs.
Ways to Accidentally Commit Fraud
Unfortunately, it is very easy to accidentally commit car insurance fraud. Here are some scenarios that could occur:
- Giving the wrong information when signing up: When signing up for a policy, it’s important to provide very accurate information to avoid committing fraud. For instance, if you can’t remember whether you’ve had an accident or ticket in the past five years, instead of guessing, look through your records and find out for sure. Also, really try to correctly estimate the miles you drive to work. These issues may not seem like a big deal, but they are to the company since these factors are used to estimate your auto insurance quote.
- Forgetting info after an accident: After an auto accident, if you are coherent and capable, it’s good to take notes while on the scene. Also take pictures of the accident for your own records. You want to recollect as much as possible as accurately as possible so that inconsistent facts can’t come back to bite you later in what becomes a denied claim or accusation of fraud.
- Getting the wrong advice: Sometimes people get caught up in auto insurance fraud by taking the wrong advice. This is especially true for someone signing up for their first policy or getting into their first accident. A friend who is used to “bucking” the system may tell you that you can skip details to lower your auto insurance rates or increase your claim amount. Listening to the wrong advice could get you in trouble.
It’s true that most people fall into the above categories if they commit fraud at all. Unfortunately, there could be repercussions for the act.
Repercussions of Accidental Fraud
Since, in most cases, accidental fraud will fall into the soft fraud category, the penalty usually is pretty light. Here are common auto insurance fraud penalties:
- Denied claim: If an insurance company finds that you’ve provided false information when filing a claim, usually the most serious penalty is having the claim denied. Of course, this could cost you thousands of dollars if you’re left with the responsibility for paying for the damage to your car out of your own pocket.
- Cancelled coverage: When it comes to providing false information when signing up for a policy, an auto insurance company is likely to cancel your coverage altogether. This puts you in the position of having to quickly shop for auto insurance before driving again; something most don’t want to do.
- Misdemeanor conviction: The worst-case scenario for soft fraud is picking up a misdemeanor conviction. Unfortunately, it could happen depending on the state you live in and the type of insurance fraud you’re convicted of. The penalty could be jail of up to five years or a fine of up to $15,000. While this repercussion rarely occurs when the fraud was an accident, it’s something you should consider as you manage your policy.
If you want to avoid becoming entangled in the accidental auto insurance fraud web, it’s important to be as accurate as possible when applying for coverage and making insurance claims. The more seriously you take your insurance policy, the less likely you will be to find you’ve committed an accidental fraudulent act.
Stacey Bumpus started writing as a youngster, creating little fun newsletters to distribute to her elementary school friends. But it wasnâ€™t until she completed her bachelors and masters degrees in communication that she realized her fun pastime could become a career.
After spending years in corporate communications, she discovered that freelancing was her cup of tea and fell in love with finding the latest financial news. Now, providing news and tips about taxes, mortgages, banking and even logging her efforts to save toward retirement, sheâ€™s not only fulfilling her childhood passion, but also helping others manage their finances responsibly.