The unpaid premiums have gone up to a tune of around $150 million each year due to improper application of discounts, states an executive from a firm which checks the data for auto insurance companies.
Insurance fraudsters are now turning to other innovative ways to cheat on the amount of insurance they pay. They claim their luxury cars to be farm equipment and are reaping the benefits by way of hefty discounts on their auto insurance premiums. The San Francisco Company Quality Planning is in charge of the verification of the policyholder’s data for auto insurers and this company has come out with these startling details following their assessment.
When people use their vehicles exclusively on their farms, they can get a discount of up to 20% from the auto insurers. This discount is provided as the farm vehicles are less exposed to risks such as theft, mishaps, collisions etc., when compared to vehicles that are driven in the city.
Around 80,000 vehicles were assessed by Quality Planning as these vehicles had claimed the farm-use discount last year. Geocoding techniques were used to determine if the address where these vehicles were housed were indeed in rural areas and if there was anyone who was engaged in some sort of active farming activity there.
It was found that 6,382 vehicles which amount to 8% were actually housed in areas where less than one percent of the population had engaged in any farming activity as per the US census data.
There was a Cadillac Seville in L.A. that was listed as farm equipment and the owner managed to avail an annual savings of $61. Then, there was an Audi A4 which was also listed as a farm vehicle. This was from Brooklyn, New York and the owner got an insurance savings of $389.
Robert U’Ren who is the senior VP of Quality Planning stated that honest people finally ended up subsidizing on the insurance costs of dishonest individuals.
This dishonest application of farm-use discounts are done only by some of these insurance fraudsters in order to save some money. These fraudsters are basically policyholders as well as insurance agents. This results in around $150 million by way of unpaid premiums each year.
Farm use is rarely verified and hence it is an easy way to cheat and bring down the auto insurance premium costs, stated U’Ren. Insurers rely on their agents and underwriters sometimes use maps from Google, to do the auto verification process. Fraudsters get away as there is no punitive action taken.
