Auto Insurance Fraud Comes in All Shapes and Sizes

May 26, 2016

A recent study by the auto insurance industry reveals that fraud costs the industry $50 billion each year. And with that much money at stake, the criminals can get pretty creative.

South Florida law enforcement used “Operation Cold Call” last year to bust up a personal insurance protection (PIP) fraud ring that used chiropractors, lawyers and clinic employees. Undercover agents infiltrated the ring over a year’s time, uncovering a network of con artists who recruited and paid people to lie about injuries and the healthcare they received after crashes. But fake injuries are pretty tame compared to two other schemes mentioned in the report:

  • The Montana License Plate Scam: Montana has no sales tax or use taxes on vehicles. In this scheme, an unscrupulous attorney in Montana helps out-of-staters create a limited liability company in Montana. Then that LLC is used to buy an expensive sports car or recreational vehicle. The vehicle is taken back to the LLC owner’s home state, and technically, the owner is driving a “company car” with Montana plates. But if there is a wreck, theft or weather damage, the auto insurance company may cancel the policy or deny the claim due to violation of insurance and registration laws within the driver’s home state.
  • The Hot Wheels Ruse: One insurance company had a customer make a claim for parts stolen from the customer’s vehicle. Everything appeared legit at first, until investigators took a closer look at the photos submitted with the claim. The photos were actually extreme close-ups of a toy car, but at least the toy car was the same make and model as the customer’s real car.

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