Crash for Cash Insurance Fraud
The insurance industry is a conglomerate of more than 7,000 companies that collect over $1 trillion in premiums each year. This makes insurance companies the prime target of a wide range of fraudulent activities. The total cost of insurance fraud (not related to health insurance) is estimated to cost more than $40 billion per year, which is passed on to consumers in the form of increased premiums. On average, insurance fraud is estimated to cost the average U.S. family between $400 and $700 per year.
While there are many different types of insurance fraud, some are definitely more common than others. one common type of insurance fraud is known as "insurance crash for cash." Here is an overview of insurance crash for cash; what it is, how it occurs and how it can be stopped or avoided.
What is Crash for Cash Insurance Fraud?
In essence, an insurance crash for cash scam is a claim that is made on a staged accident or even a non-existent one. Sometimes both drivers are involved in the scam and other times the scams involve a victim. There are many reasons a driver may make a claim on their own insurance. They may be highly insured, but their premiums are paid by someone else. If they make a claim, the other person will simply end up paying higher premiums. In other cases, the insured value of their car is higher than the actual value of their car, so they can get more for it by making an insurance claim than by selling it.
How Does Crash for Cash Insurance Fraud Work?
There are several ways to stage a crash for cash scheme. Here are a few of the more common ones.
- Staged Accident: In a crash for cash scheme involving two perpetrators, both individuals involved in the accident are in on the scam. In some cases, perpetrators may even purchase an inexpensive car that is barely running, just to crash it for the insurance claim. The payout on the car, however, is not the only possible payout. Both perpetrators can also claim injuries or medical expenses which can result in ever larger payouts. In some cases, scam artists may even include doctors or small medical facilities in the scheme and get an additional payout for medical service that was never actually provided.
- Induced Accident: While two perpetrators may be able to get a single payout, an even more lucrative scam is to involve a highly insured and unwitting victim. Scammers will often target individuals that meet two criteria: highly insured and unlikely to call the police. This means they may target specific areas like upscale bars or clubs, where drivers may be more likely to be at least mildly intoxicated, or they can target individuals that meet certain criteria. Elderly drivers are prime targets as are busy moms or individuals driving well-maintained vehicles. Well-maintained vehicles with vanity plates are an even more attractive target. Rear-ending the vehicle in front of you is generally the fault of the driver in the back, so scammers may pull directly in front of the victim's car and slam on their brakes for no apparent reason, causing the victim to run into them. In some cases, scammers have even been known to disconnect their brake lights, so the victim literally has no warning.
- Ghost Accidents: In a ghost accident, there is no victim and no accident. Instead, scammers will often take a sledgehammer or other heavy tool to damage a car and make it look like it has been involved in an accident. In some cases, they may simply purposefully drive into something to make it look like a fender-bender. They can then claim it was a hit-and-run and make an insurance claim.
- Flash for cash: A flash for cash scam is another type of induced accident that involves a scammer and a victim. In a flash for cash scheme, a scammer will wait at an intersection with a 4-way stop. When another vehicle approaches and stops at their respective stop sign, the scammer will flash their lights at them, indicating they should proceed through the intersection. The scammer will then speed quickly into the intersection, causing the victim to hit them.
Crash for Cash Insurance Fraud Detection & Prevention
Insurance companies themselves have protocols in place for sniffing out insurance fraud, but they can't always prove it. Fraudulent crash-for-cash claims are often difficult to prove because scammers choose both their victim and their locations carefully. They will often stage their accidents late at night or on deserted roads where there are less likely to be any witnesses. Many drivers are now installing dash cams so they have a record of what actually happened in an accident.
With or without a dash cam, there are also ways you can protect yourself if you suspect you are the victim of a crash for cash scheme. First and foremost is to take plenty of pictures. This includes the interior of the other car and any brake marks that might be left on the pavement. In some cases, scammers will fortify themselves or their car in some way to provide extra protection during the accident. If it is possible, it is also a good idea to take pictures of the exact placement of the vehicles when the crash occurred. You also want plenty of photographic evidence that there were no other passengers in the car because scammers will often add additional victims later.
While most states do not require you to call the police if you have been involved in a minor fender-bender, if you think you are being targeted in a crash for cash scheme, you will most likely want to call the police, although you should not relay your suspicions to the other driver, particularly if you are in a deserted area. Ultimately, your best defense is going to be comprehensive video or photographic evidence of everything you can possibly record after the fact.
iovation is a leading provider of fraud protection services as well as advanced MFA software for online banking, e-commerce, insurance, gambling, online communities, and travel and ticketing organizations.
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