Auto Insurance Fraud: Common Mistakes and how to NOT Get Busted

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Every insurance company wants to sell you their best rates on car insurance. You tell them what you have, and they give you their so call best rate. You must know if that auto insurance will cover all the damages to the property.

Auto insurance fraud is when you knowingly file a false claim with regard to a car or auto insurance policy to recover money that you’re not entitled to.

Now, we typically see these sorts of cases prosecuted in four types of scenarios. The first is when you stage an accident or the theft of your car or set your own car on fire in order to collect the insurance money.

And this is often done when people are upside down in their payments and they just want to get rid of their car and collect the insurance proceeds. Secondly, we see these cases filed when there’s a false claim of property stolen from the car.

So maybe your car really was stolen, but you claim to your insurance company that oh, by the way, I had $5,000 worth of jewelry in the trunk, when really that’s not true.

The third situation where we see these cases prosecuted is when there’s an inflated claim for damages. So maybe you did have an accident and there was about $1,000 in damages. But you conspire with your mechanic in the auto body shop to claim that there was really $10,000 worth of damages.

Finally, we often see these cases prosecuted when a person uses the wrong address in obtaining an auto insurance policy.

So for example, maybe you really live in Los Angeles, but you obtain a car insurance policy claiming that you live in San Bernardino because the premiums are much less using that zip code.

If there’s evidence of any of these activities, it could lead to charges of auto insurance fraud…

Some notes from someone who sells insurance. Purchasing a policy: If possible talk to an agent who can explain all the coverages for your state before purchasing a policy.

Just because you get a quote does not mean you have to purchase the policy, different states have different liability limits and coverage requirements. Don’t buy the cheapest policy you can find, look for the best coverage for the least amount of money.

If you financed your vehicle the finance company WILL have a max deductible allowed, find out what it is if you have a higher deductible than they allow they will force place insurance and it will cost you more than you think.

Also if you have force placed insurance be aware it does not cover you, it ONLY covers the vehicle.

IF YOU HAVE QUESTIONS ASK THEM! I would rather spend an extra 5-10 minutes now explaining coverages to you than to have you come back after an accident and ask me why you don’t have a certain coverage.

On accidents/claims: NEVER EVER ADMIT FAULT OR APOLOGIZE!! If possible have the policy come and do a police report. Police do not determine who was at fault in the accident, and sometime the only way to get the other persons information is a police report.

If you are at fault in an accident and don’t carry physical damage or towing coverage, the towing and/or storage fees for your vehicle may not be covered, check with your agent or claims adjuster.

Also your agent usually does not and is not licensed to handle your claim, the company will assign a claims adjuster who will help you through the process. If you have a difficult time with the adjuster you can request to speak to a manager or have a new adjuster assigned to your claim.

Again if you have questions ask them! Couple extras: some states will now accept a digital copy of your proof of insurance card, save a copy of it to your phone.

Most state minimum liability limits are not enough coverage and could land you in a lawsuit, check with an agent or do some research. Liability is sometimes the smallest portion of your premium and sometime it only cost a couple extra dollars to increase that coverage.

Don’t be afraid to get multiple quotes and make sure you check the down payment to start the policy, some companies require two months up front.

And don’t forget to ask questions if you have them, I’ve seen way to many people end up with the wrong/more coverage than they need.