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When you hear someone complaining about auto insurance ripoffs, they usually mean the high premiums that they have to pay every month, or the claim that didn’t get paid. In reality, though, most insurance companies are reputable businesses. The scammers are most often the people who are buying the insurance, not the ones selling it. Surprised? You won’t be after you read this.

How about someone conveniently making a claim just as a major part is about to wear out? For example, just as the car’s engine hits the 150,000 mile mark, an accident occurs that requires the engine to be replaced.

Other dishonest drivers stage a low speed accident, and then claim thousands in medical bills, sometimes going so far as to claim permanent disability.

Taking this a step further, the scammer may even bring a few friends along for the accident, and then claim that these passengers also suffered injuries. The friends settle for a goodly sum, and then give the primary culprit a percentage of their take.

Perhaps the most common auto insurance scam is the person who gets into a smaller accident, and because they want the parts replaced and not repaired, they inflict additional damage after the accident.

The last form of fraud we’ll cover isn’t perpetrated by the car owner, but the repair shop that works on their car. Unscrupulous repair shops will charge outrageous rates for their work. Their assumption is that since it isn’t coming out of your pocket, you won’t notice or care if they overcharge.

There are two different techniques that the car insurance companies use to combat the scams. The first is through the use of deductibles. Because each person knows that at least some of the cost will be coming out of pocket, it insures that you only use the insurance when absolutely necessary. Also, when you use your insurance, you price goes up to be insured and you wont get a cheap car insurance quote for up to 7 years from an accident. The last way they combat fraud is by making it a criminal offense that will put you in jail if caught coming fraud.

Overall, the varieties of different frauds are overwhelming. I find it quite sad that because some people choose to commit crimes such as these, your average person is the one paying higher rates and picking up the tab. It’s not fair that we have to pay for the people who abuse the system but other people’s fraud is factored into your auto insurance quote.

Tags: Auto Insurance

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