What Is Car Insurance Fraud?

What Is Car Insurance Fraud?

What Is Car Insurance Fraud?

Car insurance fraud is not something most people set out to commit.

Unfortunately, it can be almost too easy to accidentally commit fraud when you compare auto insurance quotes and are shopping around for a cheaper insurance rate than what you are currently paying.

By omitting information on an insurance application, you can be found guilty of insurance fraud.

There are two different types of insurance fraud and omission falls into the soft fraud category and is most likely classified as a misdemeanor.

Not all soft fraud is as benign as the omission of information, such as an accident or a speeding ticket that you may have legitimately forgotten.

Some soft fraud is much more serious and in areas where it is prevalent, it can even affect the insurance rates for the area.

New York, Florida and Michigan are all fighting the results of the effect that soft fraud has on their state’s insurance rates. Because these states are no-fault states, the amount paid out to injury victims has taken a financial toll on the entire state. This has given these states an extremely high rate of insurance due to the costs of medical bills.

The soft fraud that is being committed in these states generally revolves around over-payment for doctor bills and medical bills for people involved in crashes. The soft fraud that is being committed is by the doctors, the injured and the medical clinics. These people are overstating their injuries and then the doctors and clinics will over-bill the insurance companies and divide out the proceeds.

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Even though the states are working to curb these expenses and put an end to this type of fraud, this is still only classified as a misdemeanor, which may only result in fines and possibly a short jail term.

Hard fraud, on the other hand, is comprised of the deliberate cause of an accident so that the person who has been hit can claim injury and obtain monetary compensation from the other party’s insurance company. It is theft, just like setting your own house on fire for the insurance money is theft.

Hard fraud is considered a felony once property damage or theft has reached a certain monetary threshold set by your state, or there is a death. Felony convictions can result in long prison sentences and heavy fines and restitution. Hard fraud is much more likely to be intensely investigated by officials.

Unfortunately, everyone pays for someone else’s theft and fraud. While the perpetrators may not do any real jail time or the fraud goes undetected, the rise in insurance rates affects everyone.

Even though you may not be able to change the laws in your state, and some states are trying to change their laws, you can still do your part to get cheap car insurance.

Compare auto insurance quotes as often as you like; comparing auto insurance premiums does not cost you a thing. As the states work to combat these fraudulent activities, the rates will eventually start to go down to a reasonable level. You can take advantage of lower rates by doing your auto insurance comparison regularly and being aware of the changes in your state’s laws.

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Auto insurance comparison is easy to do. You can check online and you can check with your local insurance agents for insurance quotes. Either of these ways are quick and with online checking, you can do it 24/7.

If you do notice a change in your state laws that will affect the way the insurance rates are calculated, be sure to ask your agent or your insurance company for a new quote on your premium. Comparing insurance is one of the smartest ways that you can save money.