It appears that law enforcement authorities are increasingly pursuing allegations of insurance fraud with the help of insurance companies and tipsters. In the Philadelphia area, 12 people were arrested and charged with their roles in an auto insurance scam that totaled $500,000. There are dozens of different crimes that are referred to generally as insurance fraud. The basic definition of insurance fraud is the providing of false information to an insurance company in order to gain something of value in return. One of the most prosecuted types of insurance fraud is auto insurance fraud.
Some of the most common types of auto insurance fraud allegations are:
- Exaggerating wage losses due to injuries stemming from an auto accident.
- Filing claims for injuries not connected to an accident.
- Reporting inflated costs of repairs.
- The billing of new parts on a repaired vehicle when the repairs were actually done with used parts.
- "Past posting" which is a scheme where a person involved in a car accident who does not have insurance gets insurance and then reports the vehicle being involved in an accident.
- "VIN switching" is when a wrecked vehicle is reported as repaired and sold when, in fact, the VIN plate is actually just switched and placed onto a stolen car of the same make and model.
- "Ditching" is a scheme in which someone abandons his or her car and reports it stolen in order to collect on an insurance policy or to resolve an outstanding loan.
- Staged accident schemes occur when an auto accident is prearranged. In some instances all drivers are involved in the scam. In others, perpetrators cause an accident that leads an innocent driver to believe he or she is at fault. An example of this type scheme is called the "swoop and squat." This occurs when a victim driver is passed by two cars and the lead first car will cutoff the second car forcing it to stop abruptly which causes the victim driver to rear end the second car. The rear-ended vehicle will contain a number of occupants who will all claim injuries.
- Insuring and collecting on a nonexistent vehicle. This type of scheme involves the use of forged car titles.
- In the case in which 12 people were arrested today, the defendants allegedly helped drivers lie about their address in order to obtain lower insurance rates.