What Is Car Insurance Fraud?

Insurance fraud is the act of deliberately seeking to mislead or deceive an insurer for the purposes of financial benefit. Acts of insurance fraud can range from omitting relevant information regarding your claim, seeking to deliberately orchestrate an insurable incident as well as well as outright lying or fabricating details. In short, if someone carries out any act to obtain improper or undue payment from an insurer, they are committing insurance fraud.

With insurance fraud estimated to cost UK insurers over £1 billion per year, insurers are keen to ensure that all claims are legitimate and legal. However despite their best efforts, sometimes innocent policyholders can be caught up in fraudulent claims and left out of pocket.

What are the common types of car insurance fraud?

Motor insurance fraud is estimated to cost the UK Insurance industry over £1 billion a year. These acts of fraud are typically unplanned and not premeditated, however organised crime is also a factor in some fraudulent insurance claims.

• Stolen cars – There are many elaborate ways in which fraudsters can seek to defraud insurance companies through alleged stolen car cases. This includes selling off vehicles to black market repair shops and then claiming on the car as stolen.
• Crash for cash – This is perhaps the most malicious form of car insurance fraud as it involves the deliberate entanglement of innocent drivers in fraudulent insurance claims. Fraudsters will often stage accidents involving innocent road users and then demand compensation. Fraudsters can demand that you either pay cash for the staged damages or file a claim with your insurer for a payout.
• Ghost brokers – Ghost brokering is the act of selling illegitimate or fake insurance policies to customers for the purpose of making a profit. This is typically done by purchasing a legitimate policy from a credible insurer and then amending the policy to be sold to unsuspecting third parties.

The unfortunate reality of these scams is that innocent road users can find themselves involved in claims they should not be liable for, potential penalty points, seizure of your vehicle and being forced to cover the excess costs if the fabricated claim is successful against you.

How does crash for cash fraud happen?

A ‘crash for cash’ incident is typically orchestrated by fraudsters in a way which makes an innocent third party seem liable for damages to the fraudster’s vehicle or person. Typical tactics used by car insurance fraudsters involve.

• Breaking suddenly in order to cause a rear-on collision
• Pretending to be more significantly injured in an accident than what is true, for example whiplash, back problems and other injuries that are hard to verify.
• Pressuring you to accept liability when this may not be the case
• Fabricating the details of the incident to your insurer

How to protect yourself against car insurance fraud

Being caught up in a fraudulent insurance claim can have some serious consequences. For example, if you purchase a fake insurance policy you will essentially be uninsured. This means if you are stopped by police, you’ll be considered to be driving without insurance.

Here are some ways to avoid being caught in a crash for cash incident

• Always leave sufficient following distance so that you are less likely to be caught be a fraudulent driver trying to suddenly break without warning.
• Invest in dash cams as this can help you provide evidence against fraudulent claims. For example if your dash can show a rider reversing and throwing themselves back onto your hood, you will be able to successfully combat their claim against you.

Here are some ways to protect against ghost insurers

• When you purchase a car insurance policy, always check you are getting it from a legitimate source such as a comparison site. Check their authenticity with the FCA (Financial conduct authority) or PRA (Prudential Regulation Authority). These sites are regulatory bodies that monitor financial services in the UK.
• If a policy seems too good to be true, be sceptical and do more research.
• Check the insurer has contact details, virtually all insurers are reachable in some way.

How to report someone for car insurance fraud

if you suspect insurance fraud then you can report it to Action Fraud at 0300 123 2040

Insurance fraud is not a victimless crime as it pushes up insurance prices for all of us as well as leaving innocent road users out of pocket. It is important to be aware of car insurance scams and to report them immediately when spotted.

At Quotezone, helping people find better deals is important to us. We can help you find the best deals on your car insurance with our panel of dedicated UK specialists. Whether you’re looking for third party, third party fire and theft, or comprehensive cover, Quotezone has you covered. We helps around 3 million users every year, with over 400 insurance brands across 60 different car insurance products as well as cover for bicycles, motorbikes and home insurance. Recommended by 97% of reviewers on Reviews.co.uk.

This article is intended as generic information only and is not intended to apply to anybody’s specific circumstances, demands or needs. The views expressed are not intended to provide any financial service or to give any recommendation or advice. Products and services are only mentioned for illustrative rather than promotional purposes.