Here’s what you can do to avoid being the victim of a fake car accident claim. You can fight back against insurance fraud and scammers.
Insurance companies spend millions of dollars each year investigating and prosecuting fake injury claims. Some of the most serious cases of fraud wind up in criminal courts. The most common scams involve auto accidents.
False claims hurt everyone by causing higher insurance premiums, and making claims adjusters suspicious of every personal injury claim.
You won’t get far trying to sue someone who files a phony whiplash claim against you. However, you can learn to recognize the signs of a scam and help prevent your insurance company from paying a fraudulent claim.
Your car insurance company has a duty to defend you against all claims, but you have to do your part. This includes recognizing the signs of a scam and collecting evidence to use against fraudsters.
Recognizing Fake Accident Scams
Thousands of motor vehicle accidents happen every day. Even the most careful person can make a mistake. That’s why we carry liability insurance. But what if that accident wasn’t really your fault? Or the other person wasn’t hurt as badly as they claim?
What is Car Accident Insurance Fraud?
Fraud is wrongful or criminal deception for financial gain. Auto insurance fraud can range from mild exaggeration of an actual injury to criminal conspiracy to fake accidents and file false claims.
There are two main categories of fraud:
- Hard fraud is serious. It occurs when one or more people stage accidents, or when they conspire to invent circumstances resulting in real or fake injuries. Insurance companies and the police take this very seriously. This type of fraud has civil and criminal penalties.
- Soft fraud is more common. It occurs most often in legitimate claims when claimants exaggerate their injuries to run up their damages. Claimants can also fake an injury by falsely using a prior injury as the basis for a new claim.
It’s virtually impossible to stop a dishonest person from filing a fraudulent claim. All they need is some connection to an accident, your name, and your insurance company’s phone number.
Car insurance companies often pay claims just to make them go away. They walk a fine line between avoiding payment of false injury claims and engaging in bad faith practices against legitimate claimants.
Whether or not a scammer cashes in on their claim can depend on your ability to recognize a staged accident scheme and give your insurance company enough information to justify a fraud investigation.
Common Fake Accident Scams
- Drive Down: The targeted victim approaches a left turn (like into a store parking lot) or merge situation, where someone with the right-of-way (the scammer) stops and waves them through. As soon as the victim proceeds, the scammer hits the gas and crashes into the victim’s car. The scammer will deny motioning the innocent driver to go ahead, so the innocent driver is blamed for the crash and the scammer’s injuries.
- Panic Stop: An older car with several passengers pulls in front of the intended victim. The scammers keep an eye on the victim in back, watching for any momentary distraction. As soon as the victim looks away for an instant, the scammer driver slams on the brakes, causing the targeted victim to rear-end the scammer’s car. All the scammer car occupants will file fake injury claims.
- Side Swipe: Scammers take advantage of dual-turn lanes, like lanes turning into busy shopping centers, to side-swipe innocent drivers traveling on the inner left-turn lane. They will blame the targeted victim for hitting them and causing their fake injuries.
- Swoop and Squat: The swoop and squat tactic involves two or three cars driven by scammers. One scammer pulls in front of the intended victim, while the other pulls alongside the victim, effectively boxing them in. When the front scammer slams on the brakes, the victim has no way to avoid an accident and collides with one of the scammers’ cars.
- Phantom Passengers: “Jump-ins” can occur when people suddenly show up out of nowhere after a crash and jump into the scammer’s car. Sometimes the victim driver won’t see the phony passengers, but they will file fake injury claims at the same time as the scammer.
- Phony Pedestrian Accidents: Some people will intentionally step in front of a moving vehicle so that they can cash in on filing a fake pedestrian injury claim.
Fake Accident Claim Red Flags
If you are involved in an accident, be especially wary if the other driver wants you to pay them cash on the spot for minor car damage.
They may act like they’re trying to do you a favor by keeping your insurance company out of it. In reality, they are happy to pocket your cash and a few days later file a fake claim against you with your insurance company.
Red flags of being set up for a scam include:
- Phony Witnesses: Criminals who stage accidents often have accomplices standing by to make false statements against you. Be wary of witnesses who immediately show up and repeat everything the fake injury victims say.
- Tow Trucks: When a tow truck rolls up without having been called, they may be in league with the scammer who staged the car accident.
- Unsolicited Advice: Some criminal rings use “runners” and “cappers” to appear at accident scenes and convince accident victims to go to unethical medical clinics or accident lawyers.
- Accident Doctors: If you’re injured, beware of “accident doctors” and chiropractors who specialize in treating accident victims, whether you hear about them from someone at the scene or see an ad in the phone book or online. Accident doctors may order excessive testing and questionable long-term treatment plans to inflate your damages claim. However, insurance companies are only required to pay reasonable medical expenses. You may be on the hook for excessive medical billing.
- Ambulance Chasers: A reputable personal injury attorney won’t call you unsolicited at home or show up uninvited to the hospital to offer their services. Watch out for any lawyer who urges you to seek medical care when you aren’t injured, especially if they are steering you to one of their doctors.
5 Ways to Fight Back Against Fraud
1. Call 911 After Any Car Accident
Call the police if you’re in an auto accident, even if there only seems to be minor damage. Don’t let the other driver convince you to handle the accident without calling the police. If the other driver is planning to use you for an insurance fraud scheme, calling the police may be enough to make them back off.
In busy jurisdictions, the police may not respond for minor fender-benders. You might not have a police report, but there will at least be a record of your call to 911.
Make a note of what happens at the scene. Pay attention to how the other driver acts and what they say. Jot down a description of each passenger, including age, where they were in the car, and what they do and say. You can ask, but passengers aren’t required to share their names or contact information with you.
2. Record What Is Said
When the other driver or their passenger blurts out something at the scene, especially when it’s related to their actions or physical condition, the circumstances of that statement are normally admissible in court as evidence of the truth.
The theory is that when under duress, like after a car wreck, the average person won’t make things up. In legal terms, such comments are “excited utterances.”
Another way the driver’s remark can help your case is when they make “admissions against interest.”
- Excited utterances: If, at the accident scene, the claimant said, “I’m all right,” or “I’m not hurt,” or words to that effect, the statements are strong evidence, because the claimant made them at the time of the collision.
- Admissions against interest: If the driver of the other car said something like, “I’m sorry. I was going too fast,” or “I didn’t see you,” or anything else that’s in your favor, those statements are considered admissions against interest. They’re credible statements showing the driver’s state of mind close to the time of the collision.
3. Gather Independent Witness Statements
After speaking with the other driver and passengers, look for witnesses to the accident. Find as many helpful witnesses as you can, and make sure you get their statements and contact information.
Witness statements can be invaluable, especially when they’re given by people unconnected to the accident, such as nearby store owners or other drivers. These people have nothing to gain from giving their testimony.
For example, a passerby may have noticed immediately after the accident that the other driver was walking without difficulty. Later, if the driver claims his leg was hurt in the collision, the witness’s statement will help prove the driver is greatly exaggerating, or even faking his leg injury.
4. Take Photographs and Video
Photographs and videos are strong evidence. Showing the cars as they looked immediately after the collision and at the point of impact can go a long way in disproving claims of serious injury.
Take as many photos and videos as you safely can. Include the accident scene, vehicles, and the people involved in the crash. Photographs and videos of the driver and passengers laughing, or speaking on their cell phones, can be dramatic proof they’re exaggerating or faking their injuries.
5. Contact Your Insurance Company
As soon as possible after the accident, notify your insurance company, no matter how minor the accident. Not only is it a good idea to call your insurance company, but it’s also your obligation.
Auto insurance policies almost always have a “notification and cooperation” clause. The clause means you agree to tell the insurance company when you are in an accident, you agree to cooperate with the company’s investigation of the accident, and you agree not to put the insurance company in a tough spot.
The notification clause has wording like this:
“Insured (you) agrees to notify the insurer (your insurance company) of any accidents and thereafter comply with all information, assistance, and cooperation which the insurer reasonably requests, and agrees that in the event of a claim the insurer and the insured will do nothing that shall prejudice the insurer’s position…”
What if you decide not to tell your insurance company about a minor accident, and the other driver submits a fake accident claim for lots of money? You would look more guilty, and your insurance company would be at a distinct disadvantage.
Another good reason to notify your insurance company is that your insurer has a duty to defend you if someone from the accident files a lawsuit against you. Generally, that means your insurance company will hire an attorney to protect your interests. You could lose that protection if you violate your policy’s notification clause.
When you contact your insurance company, tell them about any signs of potential fraud.
Tell the insurance adjuster why you believe no one was injured, and offer to provide any evidence you have supporting your position. Insurance companies despise fraudulent claims. They will welcome credible evidence from customers and independent sources.
Penalties and Prosecution for Insurance Fraud
As offended as you may be, you won’t get far with a civil lawsuit against someone who filed a fake accident claim against you. You’ll have a hard time finding an attorney to take your case if your only damages are anger and outrage. Besides, someone who stoops to faking a car accident claim is unlikely to have any assets, even if you win a judgment against them.
Let your insurance company deal with the potentially fraudulent claim. Major insurance carriers have a Special Investigation Unit (SIU) for handling suspicious claims. Evidence of fraud will be turned over to state or federal authorities for further investigation and prosecution.
State penalties for insurance scams can range from a year in jail and financial penalties for “soft” fraud, up to several years in jail and thousands of dollars in financial penalties for felony fraud cases.
For example, California Penal Code 548 punishes felony insurance fraud with up to five years in jail and financial penalties up to $50,000. Under New Jersey criminal statutes, filing a fake car accident injury claim falls under the state’s health care claims laws, and may be punishable by three to five years in jail for just one fake claim.
Large-scale “hard” fraud is a federal crime that will be investigated by the FBI and other federal agencies. A conviction for federal crimes is punishable by incarceration in federal prison.
Case Example: Multi-Million Dollar Car Insurance Fraud Scheme
In May 2018, the United States Attorney’s Office for the District of Minnesota announced the conviction of Yahye Mohamed Herrow for his role in a multi-million dollar auto insurance fraud scheme.
Herrow and others acted as “runners” who were paid kickbacks for enticing car accident victims with cash payments to seek treatments from dishonest chiropractors. Patients attended clinics for extensive and unnecessary treatment, the cost of which was billed to the auto insurance companies.
Per the US Attorney’s office:
“This case was a part of a larger investigation that ultimately resulted in charges against 26 individuals across seven separate metro-area chiropractic practices. Including this latest conviction, 24 of those individuals have either pleaded guilty or been found guilty following a trial.”
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