Maryland Auto Insurance has created a Special Investigations Unit specifically to detect and deter insurance fraud. Many people think insurance fraud is harmless and doesn’t affect them. The truth is, it affects all policy holders and is estimated to raise insurance premiums by as much as $300 annually.
What is Insurance Fraud?
There are many types of insurance fraud from understating the number of miles you drive in a year to get a cheaper rate to deliberately faking an injury to illegally collect money from the insurance company. When looking for insurance fraud, it is important to take into account the following four different types of fraud.
The first type is application fraud, which occurs when someone deliberately misrepresents information on their application in order to get money from an insurer. The second type is prevention fraud, or when someone tries to game the system or avoid payment at all costs. The third type is reinsurance fraud. This happens when an insured party hides information about a claim in order to keep their money. The fourth and last type of insurance fraud is known as settlement fraud. For example, the insured person receives payments for damages that they did not incur or receive.
What are some different types of car insurance fraud?
Theft: This is the most common type of car insurance fraud. It involves stealing a car and then filing an insurance claim for it.
Personal Injury: This is when you fake getting into an accident and then submit a false personal injury claim to your insurer.
Fake Accident: This usually involves staging a collision and is seen as one of the more sophisticated types of fraud. Law enforcement can identify a fake accident by analysis of the accident site. Faking an accident and exaggerating injuries is easy to spot in the eyes of justice.
Other examples of car insurance fraud include:
- Giving the insurance company a fake address to get a lower premium
- Including existing damage when reporting a claim
- Withholding information about your driving record
- Falsely reporting a loss or theft
Is insurance fraud a growing problem?
For many in the insurance industry, the answer to this question is yes. Insurance fraud has become a growing problem in recent years. Maryland is one of the states most impacted by auto insurance fraud. A 2021 study completed by Clearsurance using data from the Federal Trade Commission (FTC) found that Maryland ranks sixth in the United States for the most vehicle fraud cases. According to the study, “Maryland has an average of 1,893 auto fraud cases annually.”
How can I prevent car insurance fraud from happening in the future?
There are several ways that can help prevent car insurance fraud from happening. For example, track your car and driver by installing a GPS tracker in the car. It is also important for drivers to educate themselves about how to minimize their risk of fraud. Keep your personal documents safe, print copies of insurance information to have on hand, and more.
How to Report Auto Insurance Fraud
NICB Hotline: 1-800-TEL-NICB
Maryland Auto Insurance Hotline: 1-800-500-0333
Hotline Calls are Free and Anonymous
Contact the Insurance Carrier – Reach out to the insurer who you think is being defrauded.
Maryland Insurance Administration’s Insurance Fraud Division: Call 1-800-846-4069
National Insurance Crime Bureau (NICB): Call 1-800-835-6422
Federal Bureau of Investigation (FBI): (410) 265-8080