THURSDAY, FEBRUARY 26, 2015
Auto Insurance Fraud Is on the Rise
According to the National Insurance Crime Bureau, auto insurance is the greatest component of overall insurance fraud. In the 2013 NICB report, suspected cases of auto insurance fraud rose 12.7 percent from 2011 to 2012, reaching a nationwide total of 78,024. This raised the three-year total from 2010 to 2012 to over 209,000 questionable claims.
To put this in perspective, auto-related questionable claims during 2012 were over 4½ times more prevalent than the next highest category (17,183 homeowner's personal property questionable claims) and almost seventeen and a half times more than the third place category (workers compensation, including employer's liabili
What Is Your Risk Tolerance?
Studies estimate almost 25 percent of the bodily injury claims related to auto crashes are bogus. Property and casualty claims against auto insurance aren't much better, coming in at around a 10 percent fraud rate.
The NICB estimates the direct cost to you at around $200 to $300 a year extra tacked onto your premium. The indirect costs are likely to be far more than that, estimated at around $1,000 a family according to the Texas Department of Insurance.
The indirect costs aren't always obvious, but they are significant. For example, some portion of the prices you pay for goods and services is devoted to covering the inflated insurance costs of the business -- and for fraud schemes, businesses are even more tempting targets than individuals.
Estimates vary on the overall cost, but the Coalition Against Insurance Fraud puts the cost of fraudulent claims in the range of $80 billion annually. Claims tend to rise during difficult economic times, and the recent recession was no different.
Posted 4:51 PM
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