Auto Insurance Fraudster Nabbed in California


A man from California was arrested after filing a false California auto insurance claim, giving false testimonies to authorities, and reporting a crime that never happened. He is currently booked at Santa Monica County and was able to secure a bail for his temporary release.

Auto Insurance Fraudster Nabbed in CaliforniaCalifornia Insurance Commissioner Steve Poizner issued a press release today informing the public that Tony Lu, 56, resident of San Jose, was arrested two days ago after narrating a false incident so he can make an auto insurance claim. In November last year, Sentry Insurance, a coverage provider based in Orange City, sought help from the Department of Insurance after receiving a suspicious claim from Lu. They suspected that it was a fraud and had an investigation made about it. The company reported that Lu fraudulently claimed that 1999 Toyota 4-runner he insured with the company was stolen at a restaurant in San Jose. Lu said his vehicle was stolen one month before he filed for a claim and on October 16, 2008 reported the incident to the San Jose Police Department.

However, the statements he gave to Santa Clara County Regional Auto Theft Task Force and Sentry Insurance were found to be conflicting. Lu was forced in withdrawing his claim and did not get any payment from Sentry Insurance. The California Department of Insurance (CDI) conducted an investigation and alleged that Lu attempted to use his vehicle as collateral for a loan before reporting that it was stolen. The case is forwarded to Santa Clara County District Attorney’s Office for prosecution.

According to statistics recently published by the Department of Insurance, policyholders who are caught in financial troubles desperately try to get out of the situation by cashing out money from coverage. CDI also reports that there are scammers who specialize in this type of fraud.

CDI recorded an alarming 31 percent increase in suspected vehicle arson so fraudsters can file for claim.  In 2007, there were 344 referrals made to CDI for suspected car arson while figures rose to 451 last year. CDI reported that there were about 300 more suspected vehicle theft and arson in the whole California in 2008 than in 2007. 200 more suspected vehicle theft frauds were recorded last year than its preceding year.

Experts say that filing for theft or accidents that never happened are just one type of insurance fraud. They add that making two or more claims for one injury, misreporting wage loss because of accident, and inventing injuries are just some of the most common vehicle insurance fraud. They add that if fraud cases continue to rise, it may substantially affect auto insurance premium.