How to Stay Away From Auto Insurance Fraud


Your auto insurance quote is a product of multiple factors consolidated into one. These factors such as your age, place of residence, model and make of your car, etc. are deliberated to arrive at your final rates. Some of these factors fluctuate and each year, the pricing structure is adjusted to reflect these changes. And like the other utilities that you pay, part of your premium covers the investment lost to auto insurance fraud.

Most policyholders don’t really care about this. In fact, some of them are unknowingly committing auto insurance fraud themselves. To understand why this could have happened, read the points below.

Auto insurance fraud is classified into two categories: hard and soft fraud. The hard fraud happens if someone intentionally set his vehicle on fire or creates accident scenarios for the sole purpose of filing an insurance claim to collect money. These include making allegations of theft or wrecking his car into a lamppost, and so forth. The soft fraud, on the other hand, is quite different from the hard fraud. The accident did really take place, but the position or truthfulness of the documents had been tweaked to increase the position of the claimant. In most cases, people commit soft fraud accidentally, in an attempt to collect more money from their insurers or to reduce the premium costs if they’re buying a new policy.

Because soft fraud is easier to commit, many policyholders are into it. For instance, providing erroneous information or totally have forgotten about it when purchasing a new policy. Received tickets or insurance claims are two of the most twisted documents.  In addition, mileage consumption is usually reported lower than the actual use.

All these variables matter during the rate’s computation. Falsifying the data will result to lower insurance rates. However, within the life of this policy and an accident has occurred, the insurance claim might be denied if the insurer finds out that the data provided during the policy’s underwriting are indeed flawed. Should this happen, you are on your own to shoulder all the expenses needed due to the accident. Thus, it’s important to keep in mind that all information must be accurate to the best of your ability. Always check for possible errors before submitting the form to your insurer.

Insurance providers employ people to uncover these types of fraud. These people are well informed and have been exposed to all sorts of cheating. If you are thinking of committing one, don’t or you will be sorry. Do not try to exaggerate the truth for a few hundred dollars. The benefits of fraud far outweigh the cost if you are caught.

It’s possible that you could have committed a few mistakes. Inform your insurance provider right away and don’t wait for an accident to happen before doing so. This will only increase the chances of a denied claim.

It is up to your insurance provider to determine if fraud is committed deliberately or not. As long as you have supplied them with accurate information, there’s nothing to worry about. If you feel that their decisions are partial, you can take the case to the court and present your side.