Fraud Indicators in Motor Insurance
There is a popular saying that “A person is innocent unless proven guilty”. Fraud is also difficult to detect and prove. But there are certain indicators that may help in identifying the Fraud. The indicators are as follows, 1. Perfect documentation is provided by the insured in case of reimbursements.
2. Provision of bills related to expensive parts and inflated labor charges.
3. Insured makes regular accidents and there is a similar billing pattern.
4. The insured provides incorrect contact information on the documents.
5. Variation between the loss estimate and the actual billing on the positive side.
6. The garages showing excessive eagerness whilst processing the claim and for the settlement of the same.
Car Insurance Fraud Categories
Based on the types, fraud can be categorized into the following:
1. Billing for the parts not provided
This usually happens at the garage. The estimate is made as per the damages to the vehicles and the vehicle is repaired. The bills are provided for the parts needing replacement but on scrutiny, it will be found that the part was not provided and the existing part was repaired which would have caused a small labor cost. There will be a huge difference between the labor cost and the cost of replacing the part with the original part. This type of fraud is difficult to detect as the people who are processing the claim may not have any clue as to repairs done to the vehicle. On paper, the claim may look great for settlement.
2. Wrong billing
This type of fraud occurs when the part replaced is duplicate or second hand and the bill provided is for the original new part. The new part is either returned or used for some other vehicle. The claim processors should be extremely cautious as this type of fraud needs special skills to detect, but may be physically difficult for the claim’s handler.
3. Non- disclosure/concealment
The insured might have an accident and the damages are not visible but hidden. The vehicle is insured, maybe with a no down payment car insurance, as if it were in perfect condition with no accident. Once the policy is issued the insured will lodge a claim, which will be difficult to deny and the insurance company will end up paying the claim, which otherwise is not covered under the policy.
Again, a person who is experienced or guided by an experienced person will be successful in perpetrating a fraud on the insurance company. Whereas there are chances that the timer may be caught in the act. This is not necessarily related to the hidden damages, there are cases when the fraudsters were able to get a claim for the total loss of the vehicle (which was damaged prior to taking of the policy), but the insurance company could not deny the claim because of lack of evidence.
4. Providing forged bills
This type of fraud is committed by the insured or by organized gangs. This type is usually done on reimbursement claims or for international coverages. The Garage bills are forged and the claim will look perfect on paper but in reality, the papers are forged and difficult to detect. A thorough investigation will help in catching this type of fraudsters.
5. Overbilling
Sometimes the garages will be over-billing the insured when it comes to knowing that insurance is involved to make the easy extra money from the insurance company. Even the garages approved by the insurance companies may be overbilling the insurance companies for various reasons, sometimes the claims staff may be aware of this type of fraud. It needs strong-willed management and less corrupt claims handlers to overcome this type of fraud.
6. Accident manipulation
This type of fraud is done by skilled gangs or individuals in collusion with other stakeholders. The intention is to make the claim amount or money from the insurance company. Sometimes the insured also becomes a party to this type of manipulation and he is also paid a portion of the extra money received through the dishonest act. There are various types of manipulations like stage-managed accidents, fake injury claims, and forced rear-ending.
7. Other types of fraud
There are many other types of fraud that need to be identified and addressed appropriately. Some of the major ones are the non-existent crash of the vehicle, garage for billing purpose only and not for repairs and faking of whiplash and other injuries, etc.
Always remember that any kind of fraud can have dire consequences for you. Avoid providing incomplete or wrong information to get better insurance rates. This bad practice, at the very least, will make you lose the ability to obtain or maintain good insurance plans such as first month free car insurance or auto insurance with no down payment. If you want to save on auto insurance, fraud is not the way.
