Applicants, policyholders, and carriers may commit insurance fraud during the application process or in the event of an accident. Understanding the most common types of car insurance fraud can help you complete your auto insurance application honestly and follow the necessary processes when filing a claim.
Insurance fraud affects insurance companies and their policyholders since fraudulent activities can influence coverage rates. By providing accurate information when applying for auto insurance coverage, you can ensure you’re in compliance with the law and help maintain the integrity of the insurance system. In this article, we’ll review the different ways individuals and carriers commit car insurance fraud and how SelectQuote can help guide you through the process of finding and securing coverage.
What is car insurance fraud?
Car insurance fraud occurs when someone deliberately lies or deceives an insurance company for financial gain. This can happen during the application or claims process through misrepresentation of information, false or inflated claims, or other dishonest practices related to car insurance. Policyholders, applicants, or third parties involved in insurance claims can commit this type of fraud. Car insurance fraud is illegal and can contribute to increased premiums, as insurance companies must pass the costs of fraudulent activities to their customers.
Types of Car Insurance Fraud
Car insurance fraud can take many forms, and it’s an issue that can affect policyholders, insurers, and even innocent bystanders. Here are some of the most common types of car insurance fraud:
False Information: Providing false information about personal details, driving history, or vehicle details to obtain a lower premium or qualify for coverage you would not otherwise be eligible for is one type of insurance fraud that occurs during the application process.
Staged Accidents: This type of fraud involves deliberately causing or participating in a staged accident to make fraudulent insurance claims for vehicle damage or injuries that did not occur due to a genuine accident.
Exaggerated Claims: Exaggerated claims insurance fraud involves inflating the extent of vehicle damage or personal injuries following an accident to receive a higher insurance payout than justified by the actual losses incurred.
Non-Disclosure of Information: Withholding relevant information about previous accidents, traffic violations, or modifications to the vehicle to secure lower premiums or coverage is another type of car insurance fraud.
Premium Evasion: Policyholders can commit car insurance fraud by attempting to evade paying the appropriate insurance premiums by providing false or misleading information about the location where the vehicle is primarily kept or registered.
Falsifying Theft: Falsely reporting a vehicle as stolen to claim insurance money when the car may have been sold or concealed is another way individuals can commit car insurance fraud.
Application Fraud: Providing false information on the insurance application, such as misrepresenting the vehicle's primary driver to obtain a lower premium, is a type of car insurance fraud applicants can commit.
Avoid Car Insurance Fraud with the Help of SelectQuote
Whether you’re applying for a new policy or filing an accident claim, avoiding car insurance fraud is essential by adhering to the necessary guidelines and requirements. If you’re new to the car insurance application process or want to update your coverage, our licensed insurance agents at SelectQuote can help. With nearly 40 years of industry experience, we can answer all your questions and guide you through the process, allowing you to compare rates from several of the nation’s most highly rated carriers in just minutes.
