Fraud and its effect on your premium


Many people go overboard when buying a new car and buy one that they can not afford to maintain or pay the monthly payments for. You sure would look cool in that droolsome new pickup or sport car, but can you afford it maintain it? Can you afford the monthly payments? These are questions you need to ask yourself before you purchase that dream car you have had your heart set on for quite a while now.

Arson as a form of insurance fraud

Many owners of such cars find that they have bought a car that is way above their means and there is no way they can afford to pay off the loan. Since the car is on a payment plan it is difficult to sell and in all probability the owner will not have enough money to finish off the loan and then sell the vehicle.

In such a scenario many people resort to arson as a means of getting rid of the vehicle. There are people who offer services to destroy your car for a fixed fee. Many people irresponsibly suggest this method to their friends and family to get rid of the financial burden of an expensive monthly payment towards the car; such people then get in contact with someone who can “help” them out of their problem.

There have also been cases where new car showroom executives have suggested this as a course of action to their customers who approach them saying that they can no longer afford the vehicle. The misinformed owner of the vehicle is instructed by the arsonist to leave behind a sum of money in the glove box and leave the car unlocked; the amount could vary from $300 to $500 depending on where you live and how much your car is worth. The owner of the vehicle leaves the money in the glove box and the car unlocked; the arsonist comes along and opens the vehicle, checks and retrieves the money and drives off with the vehicle. The vehicle is driven to a discrete location where it is torched. The owner then contacts the insurance company who is forced to pay the financial company the remainder of the loan.

For the Insurance company

This translates to a huge loss for the insurance company and in turn affects the insurance premium of all their customers. People resorting to arson don’t understand that they are not only affecting themselves, but thousands of other people as well. Pyromaniacs be ware, this is not a legitimate practice is punishable to the full extent of the law. Insurance fraud is no laughing matter and you will have to pay the price for your ill deeds. The person who suggested this “way out” to you will get away scot free; you need to discern for yourself what good advice is and what’s not.

Torching your vehicle is not illegal in any way, however it is when you have an outstanding loan against it; more so ever when you make the insurance company pay back your loan for you.

The stand of government and insurance companies on this matter

The government and insurance companies work together to curb this insurance fraud and have hard hitting rules against anyone who has used arson as insurance fraud. There is an in depth report and study that happens for each case so as to determine how and why the vehicle caught fire. There was a law passed in 1987 called the “Burned Motor Vehicle Reporting Law” which protects against such misdemeanors.