Types of Car Insurance Fraud


Authored by Neal F. Litherland in Insurance 
Published on 11-01-2009

The idea of getting something for nothing, or for practically nothing, is one of the basics of any criminal enterprise. Insurance fraud is no different, though by far one of the more popular types of fraud in this area is car insurance fraud. A car can have parts replaced and evidence destroyed if need be. Also being mobile and easily transferred, this makes a car almost ideal for the purposes of insurance fraud.

The first type of car insurance fraud is probably one of the most basic scams. Two people arrange an accident, where one driver is insured and the other isn’t. In this case they can both split the money that’s paid out by the single insurance company to pay for the damages. This scam can be continued on a pseudo-regular basis, as long as it isn’t regular enough to get suspicious.

Another form of car insurance fraud only requires a single driver. Often called the brake-slam, it’s when a person drives in front of another car and then intentionally slams on their brakes so that they’ll be rear-ended by whoever is behind them. Since the damage is to the rear of their car, the driver who struck them is generally considered to be at fault as far as the insurance company is concerned. This scam is less common now, since insurance companies have caught on and now investigate more thoroughly who is actually at fault in any auto accident.

Still a third kind of car insurance fraud is usually called the swoop and squat. In this particular form of fraud, there are two criminal drivers, and an innocent victim which is in a third car. The first criminal driver is called the squat. He or she drives in front of an innocent person’s car. The swoop is a partner in the scheme, and he or she cuts off the squat. The driver of the squat slams on the brakes and gets rear ended by the victim. It appears to be an innocent accident, and the victim’s insurance pays out to the squat, who splits the money with the swoop.

A popular, though more dangerous, car insurance fraud scam is called the panic stop. It’s usually done with an older model car, and several passengers in the back seat. One of these passengers watches out the back window until the driver behind them is distracted. Whether they’re looking over their shoulder, checking their makeup, or talking on their cell phone, the distraction doesn’t matter. The driver of the criminal car then slams on the breaks, and gets rear ended by the victim, who may try to panic stop. This means that since the driver was genuinely distracted, that the victim will be considered to be at fault.

It goes without saying that car insurance fraud scams are dangerous. The damage has to be real, even if the accident isn’t a real accident. People usually get injured, and sometimes die from trying to stage an accident to claim the insurance. The best way to avoid becoming a victim though is to simply be alert, drive defensively, and to be informed about these and other scams that people may try to pull.


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