Auto Accident Insurance Scams

Fraud, including insurance scams, is the second-most burdensome financial crime in the United States, second only to tax evasion [source: Edmunds]. These bogus claims can inflate your auto insurance premiums not to mention the legal headaches. To make sure you don’t fall victim, Merritt Webb gives you the following common auto accident insurance scams to look out for.

1. Staged Rear-Ending– a scammer will slow down, come to a stop, or swoop in front of the victim in in busy traffic, thereby forcing the victim to rear-end the scammer. To further complicate matters, scammers will often claim to be injured, complaining of back or neck pain which can be easy to fake.

How to avoid it: never follow anyone too closely, allow plenty of room for quick stops, and anticipate the traffic for the cars ahead of you.

2. The phony insurance official– in this scenario, the accident has already taken place. But, thanks to a corrupt tip- sometimes from the other person, sometimes from the tow truck operator, you receive a call from someone posing as a phony insurance official or consultant telling you to use a particular lawyer, body shop, mechanic, whatever. Most often, this recommendation is fraudulent and part of a set up to file phony insurance claims.

How to avoid it: don’t give out your information to extra parties other than your insurance or the other person’s insurance. Use body shops and mechanics that you know or are recommended by your insurance company. Be sure to pick your own lawyer.

3. Liar-liar- in any kind of accident there can be injuries. But, for the sake of argument, say you were in a minor fender-bender and the other person is claiming to be suffering from all types of injuries. His or her hospitalization can result in your insurance company footing the bill.

How to avoid it: File a police report no matter how minor the accident.

4. Surprise Victim– You were in the accident, the report has been filed, and maybe your car is already in the shop. Then, suddenly, someone files a claim with your insurance company saying they were injured too. The problem here? They weren’t in the car.

How to avoid it: When gathering information at the scene, count the number of people in the other car and take pictures of the other car and its passengers.

5. The Cop Out– also known as a “drive-down”. You’re in traffic, at the red light, turning into a parking space, or merging into a lane, and a friendly stranger waves you into traffic. Then, as you make your move, the other driver rams their car into yours. When the cops arrive, the other person lies about giving you permission, leaving you liable.

How to avoid it: unfortunately with this one, the best thing you can do is follow right-of-way rules and stay vigilant. After all, it’s breaking the right of way rules that get you into trouble in the first place.

For more information on auto accident insurance scams, check out

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