car on fireEnlarge Photo
Thinking of just torching your car because you can’t make the payments? Or running it into the swamp because you couldn’t sell the clunker? Claiming that it’s stolen so you can get rid of that loan?
Um…you’re probably underestimating the smarts of the insurance industry.
According to the National Insurance Crime Bureau, claims related to what it terms “opportunistic fraud” are way up this year, in scenarios like this:
A car owner who is having trouble making payments on a recently purchased vehicle decides to torch the car (suspicious fire/arson), pays someone to take it, or he drives it to a remote area and abandons it (owner give-up). The car is then reported vandalized or stolen. The insurance company writes a check to the car owner, who uses that money to pay off some of or the entire outstanding loan.
Suspicious vehicle fires or arsons are up 27 percent for the first quarter of 2009 compared to the same period in 2008. Claims of hail damage—including homeowners insurance—soared 407 percent versus the previous year. Instances of fraud involving agents or adjusters were even up by a third.
And for other types of policies slip-and-fall claims were up 77 percent. Because owing more money makes you clumsier, right?
“Desperate times sometimes cause people to take desperate measures,” said Joe Wehrle, the NICB’s president and CEO, in a release. “Unfortunately, committing insurance fraud is not the solution to anyone’s problems—it only leads to more problems if you’re caught.”
“Some people think it is okay to cheat an insurance company, but the fact is, they are breaking the law, risking jail time, and causing everyone else to pay more for their insurance coverage,” added Wehrle.
The category with the largest change in the vehicle segment, again first-quarter this year compared to the same period last year, was “auto glass fraud,” up 51 percent. “Suspicious hit while parked” rose by a whopping 50 percent. Farther down the line, "fictitious loss" was up by 14 percent, and “phantom accidents”—those that never really happened—rose by 36 percent. So, probably, has recreational drug use, though.
According to a report on owner give-ups released last fall, the NICB said that this behavior is often motivated by economic factors. Those might include unemployment, being upside-down on the loan (owing more than it’s worth), or if the vehicle has become too expensive to fix.
That report pointed to the large portion of give-ups involving less fuel-efficient large SUVs and pickups. The Dodge Ram and Ford F-150 had the highest rates of potential owner give-ups, with the top loss cities being Houston, Las Vegas, and Phoenix.
Looking for a quick buck from your insurer? Think again. You can bet they’re dialing up their fraud filters this year.