What is Insurance Fraud?
There are many ways to commit auto insurance fraud. While you may think that it's only about those individuals who stage accidents with the goal of submitting an insurance claim and creating a monetary gain, there is more to it. Auto insurance fraud includes the overstatement of loss on insurance claims documents. When individuals obtain over-inflated cost estimates and submit them for the goal of making a gain on their initially legitimate auto insurance claim, they become complicit in a fraudulent activity.
Premium Increases Due to Insurance Fraud
Your auto insurance premium is determined based on many different factors. The underwriters who process your application will pull your motor vehicle report (MVR) and look at your driving history. In some states they may also review your credit report in order to further assess the risk you present. Finally they will look at your age, marital status and gender in order to make some further assumptions about your risk.
Insurance companies put all this effort into determining your premium so that they can insulate themselves from the financial damage that your potential claims can cost. They must charge a reasonable premium to you based on your risk so that they can continue to offer protection to all of their policyholders. Insurance fraud causes premium costs to go up because the insurance company is no longer able to simply look at an individual's potential risk based on their underwriting criteria because instead of accidents occurring naturally accidents are forced as a means of creating an income. This skews the underwriter's ability to assess risk and creates across-the-board premium increases. It can also result in your underwriting data sharing features with those who have submitted fraudulent claims, which can create an additional premium expense as you are seen as higher risk.
Tying Up the Claims Process
As insurance fraud becomes more and more common, insurance companies have to impose more stringent requirements on the claims process. Because underwriters aren't always able to predict risk of fraudulent claims it's up to the claims processing department to weed out the wheat from the chaff. That means that when you have a legitimate auto insurance claim to file you must jump through hoops that were developed simply to weed out fraudulent claims. This can take more time out of your life as you will need to provide supporting evidence for your claim and may need to wait longer to receive your claims check and get your car back on the road.
Increased Tax Burden
Believe it or not, fraudulent auto insurance claims can also increase your tax burden. Often, insurance claims involve a police report of some kind. And when the police are called out to a fraudulently created auto accident scene to take statements and record information, they are using taxpayer dollars to do so. The more fraudulent scenes they must attend to, the more manpower is necessary, and the more tax dollars are spent on unnecessary activities.
You may not be able to single-handedly stop auto insurance fraud but you can make sure that you aren't involved by always submitting accurate claims and reporting any suspicious behavior. To find out more about how you can fight insurance fraud and to compare auto insurance rates give us a call.
Joe Filer is President of Filer Insurance specializing in auto, home & business insurance in Miami, and surrounding areas in South Florida. Call 305-270-2100 today for a Miami car insurance quote.
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Car Auto Article FeedFind More ArticlesSearchSimilar ArticlesThe Impact of Auto Insurance Fraud on the IndustryRecent ArticlesFacts Your Insurance Company Might Not Tell You AboutLearn How Teenagers Can Get Affordable Automobile InsuranceCan High Risk Drivers Get Affordable Insurance?Car Insurance Tips For The Modern DriverCar Insurance Quotes Come To FruitionHow to Get the Best Car InsuranceAcquiring a Car Insurance Quote Should Be an Informed ProcedureSomething About Automobile Collisions and Car InsuranceWhy You Can't Find Cheap Car InsuranceFactors That Affect Insurance PremiumsSubmitted On February 20, 2012. Viewed 6 times. Word count: 548.MLA Style Citation:Filer, Joe".".20 Feb. 2012EzineArticles.com.28 Feb. 2012
Filer, J. (2012, February 20). . Retrieved February 28, 2012, from http://ezinearticles.com/?How-Auto-Insurance-Fraud-Affects-You&id=6893354Chicago Style Citation:
Filer, Joe "." EzineArticles.com. http://ezinearticles.com/?How-Auto-Insurance-Fraud-Affects-You&id=6893354
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