Car Insurance Fraud

Car Insurance Fraud

It never feels good to fall victim to a scam or pay more for a product because of it. That’s what it is like with car insurance fraud.

Car insurance fraud happens when someone lies to get a better rate or a larger payout. It could be intentional or accidental, but either way it can cost you money in premiums. The FBI estimates that car insurance fraud costs the average family an additional $400 to $700 every year. In addition, nearly 7 in 10 consumers are tricked into illegal schemes, according to the Coalition Against Insurance Fraud. Here’s what you need to know about car insurance fraud, including some clever scams that could catch you unaware.

What are the types of fraud?

Staged Accidents

In staged accidents, dishonest people intentionally cause a collision with an unsuspecting driver. Then they misrepresent the situation, putting the other driver at fault—and thus get a payout that they don’t deserve. Common scenarios for staged accidents include:

          • Two vehicles trap your car and force you into a rear end collision.
          • Someone waves you on that it is safe to pull out, and then another car collides with you.
          • You are tricked into turning early and the oncoming driver moves forward and collides with you.
          • Another car purposefully sideswipes your vehicle in a dual left turn intersection.
          • A car deliberately and abruptly brakes in front of you.

Injury Fraud

Dishonest people can file claims for unnecessary medical treatments or for treatments that they did not receive. Injury fraud also includes claims where people exaggerate the extent of their injury to get a bigger payout.

Exaggerated Claims

Sometimes after an accident, a dishonest person can cause additional damage to their vehicle to receive a bigger payout. That’s why taking photos of the damage is so important to do at the scene of the accident. Another exaggerated claim could be to file multiple claims for the same accident. Finally, disreputable shops can charge for repairs that weren’t made or for substandard work.

Counterfeit Airbags

If you have your airbag replaced by a dishonest shop, you might be charged for the original equipment manufacturer (OEM) bag but get a counterfeit one installed. In a worst-case scenario, a disreputable shop could install a garbage bag stuffed with rags. Counterfeit bags are dangerous and may not protect you in the event of an accident. The good news is that it’s easy to check. With an airbag, the light on your dashboard will flash when you start the car. You can also ask an authorized dealer to check that you have a quality airbag.

Windshield Replacement Scams

There are a variety of different scams associated with windshield replacement. Here are some of the most popular.

          • A stranger approaches you in a parking lot and offers a free windshield replacement. They point out nonexistent damage that can be fixed. They take your insurance information and file an exaggerated or false claim.
          • Windshield scam artists also could go door-to-door or call you with a “special” for customers in your area. Then they follow a similar process of filing a false claim.
          • If you live in one of the states that has no deductible for windshield replacement, con artists can file a claim for your windshield and charge you for the deductible.

Tow Truck Scams

Tow trucks that appear right after your accident could be “bandits” who will only tow your vehicle to their shop and charge you hundreds to repair and release it. Calling your own tow truck will help you to avoid this scam.

False Reports of Stolen Vehicles

Reporting a vehicle that hasn’t really been stolen as stolen is illegal. So is misrepresenting the value of a stolen vehicle.

False Documentation

Intentionally providing a false address for your policy to get a better rate is a form of fraud. Understating the annual mileage, misrepresenting the use of a commercial vehicle, and failing to add a new driver also is fraud.

What are the consequences of fraud?

It depends on the seriousness of the fraud. For minor infractions, your claim can simply be denied. For more serious offenses, your policy may be canceled, you could be fined or even serve jail time. A misdemeanor for auto insurance fraud can come with a fine and probation. A felony conviction can result in significant fines and prison time.

How can you fight against fraud?

  • Carefully check your insurance application forms for mistakes.
  • If you’re in an accident, take good notes of all those involved. Take pictures at the scene. Don’t sign any documents or agree to any terms at the scene of the accident.
  • Don’t accept fault for an accident if you believe you are not at fault.
  • Be wary of individuals offering services that you didn’t request. Avoid sharing details about your auto policy with those who may be disreputable.
  • Don’t tailgate. This gives criminals a chance to take advantage.
  • If your car needs repairs or maintenance, go to a trusted professional.
  • Don’t accept a windshield replacement offer.
  • Choose OEM parts for vehicle repairs to avoid counterfeits. Before buying a used car, have a certified mechanic check that there are authentic air bags.
  • Avoid rushed decisions. If someone is pressuring you into something, that could be a red flag.

If you suspect fraud, report it to your insurer as well as to the National Insurance Crime Bureau at 800-835-6422


This article is furnished by California Casualty, providing auto and home insurance to educators, law enforcement officers, firefighters, and nurses. Get a quote at 1.866.704.8614 or

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