Insurance Discussion

A recent report from the National Insurance Crime Bureau (NICB) indicates that one of the big driving factors (no pun intended) behind the rise in auto insurance rates is car theft.

However, there’s a twist: in many cases, these auto thefts are staged by the owner themselves. Although the NICB reports an overall decline in car thefts (over 17% over the past year), a form of insurance fraud that is termed as owner give-ups has been increasing.

What Is That?

According to the NICB report, the owner give-up ploy is something that happens when a vehicle owner (one with full coverage auto insurance) literally orchestrates the disappearance or even destruction of his own vehicle. The car in question “vanishes,” after which the owner files a claim. The vehicle’s remains are later found in a river or lake or other remote area.

The owner give-up is only one variation of the staged-theft scam that is causing some sticker shock for honest people when they go to buy auto insurance.

Other Fraudulent Schemes

When a vehicle owner has a vehicle in need of serious and expensive repairs, he may attempt what is known as the “30-Day Special.” Basically, the perpetrator reports the vehicle as having been stolen and files a claim on his car insurance policy. What has actually happened is that the owner has stashed the vehicle in a storage unit or garage somewhere, or even buried it. In the meantime, the insurer has thirty days to pay the claim.

You know what happens after the perpetrator collects his settlement and cashes the check.

Export fraud is yet another scheme in which the owner works with a criminal organization. The perpetrator takes out a bank loan for the vehicle, then goes to buy car insurance for his purchase. He then sells it to his contact in the local crime organization, which loads the vehicle on to a freighter for shipment abroad. Afterwards, he files a claim with his insurer for the “theft” – cashing in on both the insurance check and his cut from Tony or Ivan.

The most creative scheme however is the vehicle that doesn’t even exist. The perpetrator forges vehicle registration papers for a “phantom automobile” – usually a classic collector car or high-end luxury vehicle – which is then “stolen” and reported to local authorities before the claim is filed with the insurer.

You Have a Dog in the Fight

Remember that insurance fraud costs everyone; insurers do not swallow these losses, but pass them on to you, the honest motorist. The NICB encourages anyone who suspects a case of fraud to contact their hotline at 1-800-835-6422. You will not have to provide your name, and in some cases a reward is offered.