Common Terms of Fraud

Insurance Fraud - The intentional misrepresentation of material facts and circumstances to an insurance company to obtain payment that would not otherwise be made.

Hard Fraud - Someone who deliberately fakes an accident, injury, theft, arson or other loss to collect money illegally from insurance companies.

Soft Fraud - When a normally honest person tells “little white lies” to an insurance company.

Intentional Loss - Damage or destruction of property willfully caused with an intent to defraud an insurer excluding arson fraud.

Impact of Fraud Insurance

Fraud loss is estimated per year to be $27.6 billion. Automobile fraud $12.3 billion, business and commercial $1.8 billion, homeowner fraud $1.8 billion and life/disability fraud $1.5 billion. Insurance fraud, the white collars second most costly offense, costs the American public approximately 96.2 billion dollars per year in increased premiums alone. A study in 2001 by Conning and Co. estimated that insurance fraud increases the average American household costs by over $5000.00/year when the rise in premiums, goods and services are taken into consideration. Homeowner fraud which includes property and casualty claims total a sum of about $30 billion per annum. (Insurance information Institute) False claims in the American healthcare system cost the U.S. an approximate $54 billion a year. (CAIF) In Canada, 10-15% of claims paid out are fraudulent. The sum of general insurance fraud inflates costs an estimated $1.3 billion per year according to the CCIAF.

Insurance Scam Fraud Protection

If you become a victim of car insurance fraud, you pay. Not only will you pay higher premiums because you may acquire a costly claim, but, as with any car accident, you and your family could pay with your lives. It is important to learn more about fraud protection so you can protect yourself from others who may choose you to be a part of their next car insurance accident fraud scam.

Insurance fraud began when insurance first began. Incidents have been recorded as far back as ancient Greece. Ship scuttling was an insurance scam in ancient Greece where ships were purposely sunk. Later insurance fraud traveled to England then to America. When automobiles were introduced it opened a whole new arena for fraudulent insurance claims. Today, with modern technology, many fraudulent car accident claims do arise from sophisticated organized crime rings that can be hard to detect. Don't let this make you a victim of an insurance scam. Whether the insurance scam is from an organized crime ring or an individual, there are fraud protection steps you can take to help you be more aware and avoid being a scammer’s next victim.

First, it is important to know what types of insurance scams are used. There are many types of car insurance scams. Set-up car accidents can range from vehicles deliberately stopping in front of a driver to cause a rear-end car accident to drivers who pretend they are being helpful but intend to cause a car accident that will look like the innocent drivers fault. Scams can also involve people one would generally trust such as doctors and lawyers.

Educating yourself more about fraud protection against car insurance accident scams is the best way to avoid being someone's next victim. Here is a list of common scams to be aware of:

Staged Rear-End Car Accidents: A scam driver will quickly get in front of an innocent car and then slam on their brakes. This causes the innocent driver to rear-end the scam driver. Along with collecting money for vehicle damages, the scam driver will often fake medical injuries to collect even more.

Adding Damage: After an accident, either staged or not, the scam driver will go to another location and cause extensive damage to their vehicle and claim that the damage happened during the original accident.

Fake Helpers: Scam Helpers will wave an innocent driver into traffic, but then crash into the innocent driver. When it comes time to file the claim, the scam driver will deny waving anyone in. Other ways fake helpers try to scam people is by offering to help an innocent driver find a auto repair shop, doctor, or lawyer. In this case, everyone is in on the scam. The body shop charges you enormous rates, the doctor and lawyer also lie to collect more from your insurance.

Since these scams can happen at any time and place, it is important to be prepared. Awareness is the most important. Watch for drivers who may be following you or examining your driving habits. Also, make sure you leave plenty of room in front of you in order to stop. If an accident does happen, take notes on everything about the other car, the accident, and everybody that was in the other car. Keep a disposable camera in your car to record damage to both vehicles. Furthermore, use your judgment in driving, not others. Make sure you have enough room to get out and just let other cars pass instead of letting others "waive you in." And, when you talk to your insurance company, let them know if you felt something was suspicious.

Thanks to:
Bobbie Sage
personalinsure.about.com

5 arrested in insurance fraud

Case involves car accidents and allegedly false billings.

Police arrested five Orange County residents last month on insurance fraud and other charges involving car accidents and false billings, the state insurance commissioner announced Friday. Pre-trial hearings for all five are expected to be held this month.

"Today's announcement of multiple arrests illustrates that we will find fraud wherever it exists," Insurance Commissioner Steve Poizner said in a statement. "Our investigators are combing through the county, in search of those who seek to fleece the system. If you cheat the system, you could be next."

The arrests included:

James Toufic Assali, 32, of Irvine for allegedly billing his insurance company $5,235 for car rental payments to a company Assali owns. Assali was charged with three counts of insurance fraud and one count of attempted grand theft.

Cynthia Irvine, 43, of Irvine, for allegedly obtaining car insurance after causing an accident last June. Irvine then incorrectly reported the date of the accident to her insurance company, according to state officials. Her husband, Barry Irvine, 45, allegedly called the other party involved in the accident and asked them to also give the wrong date to their insurance carrier. Both were charged with three counts of insurance fraud.

Oscar Jimenez Godinez, 23, for allegedly crashing into a parked car last July and fleeing the scene. According to officials, after the accident Godinez reported his car as stolen to the Santa Ana Police Department and his insurance company. He was charged with four counts of insurance fraud, one count of hit-and-run with property damage and two counts of falsely reporting a crime.

Julie Jo Lagos, 29, of Brea, for allegedly purchasing an insurance policy last April just minutes after being involved in a hit-and-run collision. Lagos then misrepresented the time of the collision so she could claim the damages, officials said. She was charged with six counts of insurance fraud and one count of hit-and-run.

By BLYTHE BERNHARD

The Orange County Register

Editorial - Checking cars for defects

THE number of kereta potong continues to rise at an alarming rate. Puspakom detected more than 4,000 last year — double the 2003 figure, and a manifold jump over the 80 recorded barely six years ago — and expects this year’s tally to increase to 5,000. The number of dangerous and defective cars may well be higher as only three out of four of the cars whose ownership was transferred were inspected by Puspakom. Indeed, since about 150,000 used cars have not been checked, their roadworthiness may be called into question, although they may not all belong to the kereta potong variety. While it may be the lawless and careless driver behind the wheel rather than the defects in the vehicle that is responsible for much of the mangled machines, injured bodies, and lives lost on the road, there is no question that strategies to reduce accidents must include measures to make sure that vehicles on the roads are in good condition. This is why periodic vehicle inspection has become mandatory in most developed countries and in some developing nations. In Malaysia, however, this has been confined to commercial vehicles. In the case of private cars, this has been limited not only to transfers of ownership but further restricted to cover only transactions involving second-hand cars financed by loans. With kereta potong posing a deadly menace, in the interest of road safety, there is every reason to make mandatory testing a requirement not only for all transfers of ownership — as advocated by Puspakom — but also for all renewals of road tax. There should, of course, be a grace period for newer cars. The Transport Ministry is considering making it compulsory for cars which are three to five years old to be inspected, in line with the time frame in those developed countries with a good track record in road safety. With motorcyclists and their pillion riders making up more than half of the fatalities on the road, there is no reason why motorcycles and scooters should not be regularly checked for their roadworthiness too. The protection that compulsory inspection affords car buyers from the fraudulent practice of kereta potong, and the role that regular check-ups play in guarding against vehicular defects, depend just as much on the rigour of the tests as on their compulsion and frequency. Inspections need to be well-administered and hassle-free. Since owners of older cars and motorcycles tend to be those with limited financial means, the fee for inspection should also be reasonable

kereta potong = a car which is usually a second hand or used car that have some part or fully part of cars assembled together by different parts from various cars and generally, it is unknown by many car buyer and perfectly disguise or well hidden marks done by the car seller.

Thanks to: 10 July 2006, By New Straits Times