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Feeling Bad for the Big Guy (and the Little Guy, too): Insurance Companies & Vehicle Fraud

Submitted by Anonymous on Jun 8th, 2009

Here’s a situation in which the Rasansky Law Firm actually feels remorse for the insurance company ? though just enough to express frustration and highlight the heightened woe of legitimate consumers:

As economic troubles continue to take a daily toll on Americans and their bank accounts, people are looking for any way to avoid falling farther into debt. Possibly the oddest, and arguably the worst, is the rise in car fraud cases

Insurance cheats are turning to a different approach to climb out of debt: lighting their cars on fire. According to the National Insurance Crime Bureau (NICB), across the nation suspicious vehicle fires increased 27% in the first quarter alone this year compared with last year. Another interesting number reported involved owner-give ups - cars intentionally destroyed or abandoned - has jumped 24%.

NICB investigators are finding a direct correlation between owners missing multiple car payments and filing false insurance claims. "People think it's an easier out if they can no longer afford a car, but, unfortunately, it's a crime," reports Frank Scafidi, a crime agent in Sacramento.

There are many stories of plans hashed out by a car owner who cannot pay his debts and is looking for a solution. However, many times these plans go awry, end up adding on costs to the debt, or possibly result in all conspirators being charged. Owners desperate enough to burn or ditch their own cars are asking for trouble, warned John Standish, the automobile insurance fraud bureau chief for the California Department of Insurance. If caught, "they're still saddled with settling the debt even though the car is not drivable," he said, plus they could wind up with a felony conviction for insurance fraud and a sentence of as many as five years in prison.

People should be aware that as the number of insurance fraud cases keeps arising, insurance companies will become much more strict about strange cases. We hear about the most bizarre ? yet legitimate ? car accidents every day. Suddenly, a legitimate insurance claim may turn suspicious, drawing out a legal fight between drivers, owners, and the insurance company. Imagine the trauma of a bizarre accident only to have your claim thoroughly investigated over the course of many months. As insurance fraud rises, even the legitimate claims are overly scrutinized, wasting time, money, and resources of all involved.

So who ends up winning in these situations? Looks like no one, despite all intentions otherwise. Not the insurance company, riddled with fraudulent claims. Not the bizarrely legitimate claims by honest drivers and owners. And all too often, not the owners desperate to better manage their debts.