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Staged Accidents And Scams: How To Spot Insurance Fraud

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If you're in an accident and there's something a little odd about either the incident itself or what happens in the days and weeks following, you might be right to think that you—and your insurer—are being played.

According to the Insurance Information Institute (I.I.I.), staged accidents altogether cost both policyholders and insurers billions of dollars annually. They've been increasingly common, too, during the recession. And with every level of thief from organized crime syndicates to rogue street thugs and scam artists involved, insurance fraud can take many forms.

"Staged auto accidents are a dangerous criminal activity that targets innocent drivers with increasingly bold schemes aimed at defrauding insurance companies," said Loretta Worters, vice president of the I.I.I., in a release on the matter.

Urban areas are more likely the backdrop for staged or fraudulent auto accidents, but contrary to what you might think, they occur more frequently in wealthier areas than poorer ones—because the high-priced neighborhoods are where people are more likely to have full insurance coverage.

The III points to "no-fault" auto-insurance states as those in which staged accidents run most rampant. Among the twelve U.S. states with no-fault laws, Florida (and the Miami area in particular) leads in questionable claims potentially involving staged accidents, followed by New York, Michigan, and New Jersey.

According to the III, there are a few key warning signs that you're part of a staged accident:

  • People who appear at the accident and direct you to (or insist that you use) particular attorneys or doctors
  • Physicians who insist you file a personal injury claim even if you weren't hurt
  • Tow trucks that arrive without any call
  • After the accident, "padded" (inflated) claims and misrepresented facts


Staged accidents in general rose by 26 percent in 2010, versus 2009, while inflated auto-body or auto-repair claims rose 31 percent and auto-glass fraud rose a whopping 450 percent in a year.

Even if you're not sure what you've seen is insurance fraud, report your suspicion. That way it would be harder to inflate the claim by making damage more extensive—and if they are pulling a scam and do get away with it this time, they'll have more trouble next time.

If you're in an accident, take notes, take pictures, and record license-plate numbers and makes/models of vehicles, as well as names and badge numbers of officers and emergency personnel. And get names and addresses for everyone involved, and for witnesses.

Click over to the next page for four of the most common scenarios for staged accidents, from the National Insurance Crime Bureau (NICB):

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