You might be surprised to know that there are entire rings of organized criminals solely dedicated to ripping off insurance companies. Theft isn’t the only crime you need to worry about. While most of the cost of this is born by the insurance companies themselves, if you’re involved in the kinds of accidents that these people cause, you can end up forking out a lot of money when you have to pay your deductible.
The reason for this is that there are many ways of causing an accident while making it look like it was the other person’s fault. I was alerted to this by a question asked by a woman on Yahoo Answers. Essentially she was saying that her brother was recently rear-ended by a teenager who did not have insurance. Instead of going through all of the paperwork, only to not get a claim awarded, the teenager simply gave him $500 to avoid going through the insurance process.
The woman’s brother then began doing this “almost full time”, and getting unsuspecting younger drivers who looked unlikely to have insurance to crash into the back of him, and then collecting the money. To answer the woman’s question: yes, this is definitely illegal.
In fact, it is a well-known car crash scam, called the Classic Rear-End Shunt, and it is one of many used by insurance fraudsters to get money out of drivers or their insurance companies. Usually it works best when the fraudster has a contact at an auto body shop who will provide him with inflated quotes.
Here are some other well-known maneuvers that could look like an accidental crash:
1) The Decoy Rear-End Shunt – A decoy car pulls in front of the criminal’s car, who is driving in front of you. The decoy car then slows or brakes suddenly, causing the car in front of you (the criminal’s car) to brake suddenly, and you to go into the back of it.
2) The Helpful Wave – The criminal waves you in to his lane, and then crashes, after which they deny waving in the first place.
3) The Swoop and Squat – This is a highly organized maneuver that involves several cars. One or more drivers in “swoop” cars will force you into position behind a car that is carrying several passengers (the “squat” car). The squat car will then stop suddenly, causing you to rear-end the vehicle. The occupants of the car will then file false medical insurance claims.
There is one other notably scam that is much more insidious, but that you should watch out for. In his book, ‘Accidentally, on Purpose: The Making of a Personal Injury Underworld in America‘, Ken Dornstein outlines a scam involving three levels of involved people. The first level are professionals such as doctors and lawyers, who reap the majority of the profits from filing fraudulent claims.
On the second level are the “cappers” or “runners” – these are the middlemen who organize the cars to crash, and recruit “volunteers”. The volunteers are usually desperate poor people, who are paid around $1,000 to step into the path of moving cars or trucks, in order to injure themselves. A large number of deaths have occurred as a result of this practice, but in the majority of cases the volunteer escapes with minor injuries, which are then extensively “treated” by the doctors involved.
What makes these rings difficult to catch is the ease with which they can move from one area to another as soon as a crackdown is enforced.
How to Avoid an Insurance Scam
Insurance scams like these hurt insurance companies first, but they also hurt you in two different ways: directly and indirectly. We’ve already seen how fraudulent PIP claims increase premiums – every year your insurance premiums go up just a little bit as a direct result of fraudulent personal injury claims.
They can also affect you very directly if you are the victim of one of these scams. Your insurance will likely pay up, but you will have to pay your deductible, your premiums will go up, and you will lose your no-claims bonus.
So here are some things you can do to avoid being the victim of one of these scams:
1) Call the police, THEN your insurance – The law requires all accidents to be reported, regardless the seriousness of the crash. You can do this by going down to the station, or even sometimes online, but calling the police right in front of the other person, even to be told, this has an immediate effect: if they are scamming you, they will change their story, panic, or simply run away – any of which will absolve you of guilt.
2) Don’t be too polite to accuse someone of fraud – if you think the circumstances of your accident were questionable, speak to the police about it. Chances are they will know of an insurance scam ring operating in a nearby area.
3) Get a witness – Find someone who was around and who saw the accident who will make a statement on file. Get them to check the tail-lights of the car you hit, if you rear-ended them, and make sure they were working. If they were not, you may not have to pay