The insurance industry calculates that property and casualty insurance fraud costs our society over $30 billion annually. According to some estimates, this insurance fraud adds about $200 to $300 annually to total insurance premiums for the average household. Auto insurance fraud ac­counts for a large segment of these losses, which are ultimately passed on to you, the auto insur­ance consumer, in the form of higher automobile insurance premiums.

Auto insurance fraud can occur in a variety of ways. For example, unethical groups of doctors and lawyers can team together to over treat patients and thus exaggerate claims. Staged accidents are also a common problem, in which a conspirator’s car pulls in front of an innocent driver’s automobile and stops suddenly. This causes the innocent driver to rear-end the conspirator’s ve­hicle. Thus, the innocent driver often believes he or she is negligent. Typical victims are usually driving alone in new and expensive vehicles. In many cases, the criminal driver uses a large, old­er sedan with several passengers inside.

There are several ways by which you can avoid becoming a victim of these “staged accidents,” including the following.

  • Avoid tailgating at all times and focus on driving defensively.
  • Obtain the names and driver’s license numbers of all occupants in the other car.
  • Attain the names and key information of witnesses.
  • Report your suspicions to your insurance agent immediately.

In addition, auto insurance companies emphasize several key steps drivers can take to fight auto insurance fraud in general, including the following.

  • Be aware of all the various ways in which auto insurance fraud can occur. Your agent is a good source for this information.
  • If you believe you are a victim of auto insurance fraud, report your concerns to your agent.
  • Communicate with your legislative representative about this issue and request new laws to assist the fight against automobile insurance fraud.

Copyright 2008, 2016, International Risk Management Institute, Inc