Insurance Fraud Raises Premiums For Everyone

A Serious National Problem

Today people seeking Cheap Car Insurance might find the average increase in insurance costs paid by Americans as a result of the filing of fraudulent insurance claims by criminals startling. Since auto insurance premiums rise when insurers pay more than expected, the problem of fraud inflates everyone’s rates. Insurance fraud scams ultimately victimize everyone.

Indeed, in recent years, auto insurance authorities have noticed a significant increase in insurance fraud rings nationwide. Organized crime contributes to this problem. Some widely reported recent fraud convictions revealed the presence of very large, full time gangs operating across multiple states.

Insurance Fraud in Texas

Unfortunately, insurance fraud does pose a problem in Texas also. For example, in 2013, authorities in this state conducted formal investigations in some 550 cases of alleged insurance fraud. The range of illicit activities included medical insurance fraud and a wide variety of schemes. Reportedly, the property involved amounted to more than $10.3 million. Auto insurance rates go up when fraudulent claims make it more expensive for insurance companies to cover the cost of remaining in business.

Auto insurance fraud comprises one component of this greater problem. Problems caused by fraud sometimes impact the operations of insurance companies significantly because insurers seek to pay legitimate claims to their insured customers in a timely manner. No one appreciates delays flowing from protracted investigations while an insurer verifies the legitimacy of a claim.

General Types of Auto Insurance Fraud

Some experts divide auto insurance fraud into two broad categories. The problem runs the gamut between criminals who file completely bogus claims based on events which never occurred, or after scripted accidents, to the activities of insured clients who exaggerate claim amounts. Both types of dishonest behavior ultimately contribute to higher auto insurance premiums for everyone.

In fact, the National Insurance Crime Bureau reportedly estimates that auto insurance fraud and other types of insurance crimes causes the average American to pay anywhere from $200 to $300 extra in premium costs every year. This figure essentially represents a charge that would not exist if criminals did not seek to defraud insurance companies.

Ways to Prevent Auto Insurance Fraud

In addition to reporting auto insurance fraud if this issue ever comes to your attention, as a consumer you have the ability to fight back against the problem by maintaining careful records and reporting automotive expenses honestly when reporting claims.

The white collar crime of fraud costs significant sums of money every year in the United States. The recent high profile cases involving organized crime rings demonstrate that fraud schemes may succeed in bilking members of the public and insurance companies for some period of time, but the perpetrators eventually come to the attention of regulators. Today, many of the individuals arrested as a result of those investigations serve time in federal or state prisons. Auto insurance premiums ultimately depend upon the honesty of most people.