OAIN: Auto Insurance Fraud Comes in Many Forms and Costs Honest Consumers

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A new report from Online Auto Insurance News discusses the many types of insurance fraud and the difficulties of tracking the perpetrators.

Some motorists will try anything to lower their car insurance premiums—from lowballing their reported mileage to claiming a sports car is used for farm work—industry experts say.

In an article released Wednesday, Online Auto Insurance News reports that those false claims can mean hefty losses for insurers, making it a challenge for honest consumers to find low cost auto insurance.

“It’s a cat and mouse game” between policyholders stretching the truth—or lying outright—and providers, said Pete Moraga, a spokesman for the Insurance Information Network of California.

That statement echoes a recent report from a San Francisco company that said thousands of motorists in urban areas across the U.S. falsely claimed their luxury and sports cars as farming vehicles last year in order to take advantage of discounts from insurers worth as much as 20 percent.

Quality Planning, which verifies policyholder data for insurers, reported that about 6,400 of 80,000 vehicles surveyed were kept in garages in cities with little if any agriculture but still received the farming-vehicle discount.

Coverage fraud adds up to about $30 billion a year nationwide, according to the National Insurance Crime Bureau (NICB). And the Los Angeles County District Attorney’s office estimates that more than a quarter of that sum is attributable to auto policy fraud.

It is difficult to quantify more specific varieties of fraud or to identify those committing it, experts say, partly because fraud takes so many forms.

Some cases involve accidents staged by crime rings. In others, consumers lie about how badly their car was damaged in an accident or register their car out of state to take advantage of lower premiums.

The South Carolina attorney general even considers underreporting average annual mileage a form of fraud.

Source: http://www.scag.gov/insurance-fraud

Providing false information to providers can lead to claims being denied and policies canceled. And more serious cases of fraud can lead to prosecution and steep fines, NICB spokesman Frank Scafidi said.

To read the article, go to News.OnlineAutoInsurance.com.

To read more about other car coverage issues, go to http://www.onlineautoinsurance.com/low-cost/, where you will find informative resource pages and a free-to-use quote-comparison generator.

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Gregor McGavin
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