California Reports Rise in Car Insurance Frauds


Steve Poizner, California’s Insurance Commissioner recently reported that suspected insurance fraud cases in the state are on the rise. Poizner says that there was sharp spike in the number of auto arson and theft reports last year, compared to the previous years.

California Reports Rise in Car Insurance FraudsTo be exact, California’s Department of Insurance has seen suspected auto insurance fraud cases increase by 31 percent last year compared to 2007. Insurance providers, law enforcement agencies, and private citizens usually refer suspected incidents of fraud to state insurance officials. The Department of Insurance then investigates these reports and forwards probable fraud cases to the respective law enforcement bodies.

According to Poizner, the increase represents 451 reported cases in 2008 as compared to 344 in 2007. State insurance officials suspect that the sudden rise in suspected fraud reports points to increasing desperation among financially-strapped car owners looking for ways to claim insurance money.

Some industry experts say that the high unemployment rate and poor economy is forcing more and more Californians to resort to illegal means just to earn money. They point out that while reports of car arson and theft incidents have increased substantially last year, other forms of insurance fraud like hit and run, vandalism, and inflated damages, have remained constant so far since 2007. This can indicate that scam artists and desperate policyholders are turning to more elaborate schemes to collect more insurance money.

Aside from the rise in suspected fraud cases, the Department of Insurance has also seen 200 more suspected car theft referrals last year than in 2007. State insurance officials contend that the sudden spike in suspected auto theft incidents can be a strong indication that car owners are fast becoming desperate. It is unclear, however, if all of the referred incidents will be considered probable insurance fraud cases.

Despite car insurance premium averaging at the lowest level in more than a year, more Californians are finding it harder to maintain coverage. Recent studies say that even with the national average for insurance at a low $1,800, about one out of every five motorist in the state does not have any form of insurance.

Many car owners are choosing to forego insurance just to save money while other, more daring motorists are resorting to more serious plans such as arson and planned theft. The state of California imposes stiff penalties and even prison sentences on individuals proven guilty of car insurance fraud.

For his part, commissioner Poizner say that the Department of Insurance and law enforcement agencies in the state are hard at work finding scam artists and other perpetrators.