Are Florida Auto Insurance Scams Increasing Insurance Premiums?
Even if you are never directly involved with insurance fraud, if you are a Florida resident, it still impacts your Florida auto insurance rates. Florida auto insurance scams put innocent people in danger, slows down the efficiency of honest insurance claims and increases our Florida auto insurance premiums.
In some states, fraudulent activity impacts as many as 33% of auto insurance claims.
The National Insurance Crime Bureau reports that L.A. holds the title for the biggest percentage of auto insurance claims that include fraudulent activity.
California, Florida, Texas, New York and Maryland are the top five states for fraudulent insurance claim activity.
Since an unidentifiable amount of fraud is not reported, it is tough to measure the real cost that is passed down to motorists.
Experts estimate that fraudulent auto insurance claims add $241 million to premiums in New York City alone and that insurance scams are responsible for tens of billions of dollars in costs every year on a national level.
Here are some of the most typical auto insurance fraud situations:
1. Auto Dumping is a type of vehicle insurance fraud that occurs when a car owner sets their car on fire, dumps it in a lake, abandons it, or sells it before making an auto theft claim.
When the car is sold before being reported stolen, the fraud is intended to pay out via an insurance settlement to replace the stolen vehicle and the sale of the original car.
2. Falsified registration is when an insured registers their vehicle at an address other than their own residence to take advantage of lower insurance premiums. It is considered fraudulent and is a way of scamming insurance carriers.
Drivers who are involved in this scam typically live in expensive-to-insure areas of the country with higher theft rates. To reduce premiums, they register their vehicles in other states or areas where insurance premiums may be less.
3. Overstating repair costs after an auto accident. This scam is committed by less-than-honest repair shops, if you take your vehicle into the shop after a car accident, and they use shoddy parts to do unneeded repairs. By fixing your vehicle with less expensive, possibly unsafe parts and then billing your insurance company for new parts that they never used, they are committing fraud for financial gain.
Body shops also can commit fraud by overstating vehicle repairs costs that overcharge the insurance company and the consumer. Overstating an automobile’s damages, the auto body shop can skim additional funds from unnecessary vehicle repairs.
4. After-marketing airbag replacement is an additional kind of car repair scam. It occurs when a mechanic does not replace the airbag after a car accident. Instead, the mechanic stuffs the compartment with peanut packing materials and beer cans so that the sensors continue to work.
Because of this, states such as California have now passed laws for replacement of airbags. If a phony airbag is used as a substitute, the guilty party can be subject to a year in prison and as much $5,000 in fines.
5. Windshield replacement fraud can take consumers by surprise. A fraudulent scammer can also approach you claiming to be a windshield repair specialist, and they will attempt to convince you that you need a new windshield, even when you don’t. They will tell you that you’re in luck because they just so happen to have your type of windshield in stock. This is bad because this claim type is easily paid by your insurance company.
This also considered fraudulent and it might increase your auto insurance premiums. You could even lose your insurance coverage if you fall for this kind of scheme, especially if this scam artist uses your insurance information to make several windshield replacement claims under your policy.
When it comes to Florida auto insurance scams, it is important for us to realize what these fraudulent practices are so that we are more knowledgeable of them and better able to protect ourselves.
If you are a resident of Florida, and you would like to work with a seasoned team of professionals who can help you make the most educated decisions about your Florida auto insurance, contact us.
Also, read our other blog post about why Florida auto insurance may be increasing.