How a scratched fender is payday for fraudsters
There was an Auto Insurance Fraud Summit in Miami this week at which a woman told her story of a minor parking lot accident, a scratched fender and a resulting lawsuit. Her voice was shaky as she recalled the first accident she ever had after priding herself on decades of safe, accident-free driving. She was just as nervous telling the tale as when it all occurred. Her story: Before backing out of the shopping center parking space, she checked and double-checked for oncoming traffic. Slowly, slowly she edged out. And then, ding! She tapped a car with four young women in it. She said no one appeared injured at the time, and the damage to her car was so minor she was able to buff most of it away. Yet, her insurance company tells her the other driver has a lawyer and is suing for injuries – over a nearly imperceptible scratch.
The senior citizen in this particular car-crash tale thinks it was a setup. She is equally distressed over the higher insurance rates she will now be paying, and she is not alone. There is so much fraud and abuse in the state’s no-fault auto insurance system that all drivers are paying higher insurance rates. Hearing her story got me thinking about what the dialogue might be between perpetrators if this was indeed a setup. Below is fiction, but it is not farfetched.
Phonia: Once again, I find myself with too much month left at the end of my money. Sure wish I had an easy way to get some extra cash.
Scamalady: I’ve heard there’s money to be made from getting in a car crash on purpose.
Phonia: Sounds dangerous, plus I happen to be anti-pain.
Scamalady: Funny you should say that because I got the idea from one of those radio commercials that advertise lawyer and doctor referrals for pain. They say if you get in a car crash you are entitled to up to $10,000 in medical benefits and lost wages.
Phonia: $10,000? Entitled? Man, I sure want something I’m entitled to – and if it’s on the radio, it must be true.
Scamalady: I’m not sure you could get the entire amount. But this friend of mine got a dent in his bumper and wound up making an easy thousand bucks. And, he got a couple of massages, too. He wasn’t hurt at all. He just went to this clinic, they did a couple of x-rays, gave him some aspirin, and a check. Easy money.
Phonia: There must be a downside. Like what if I bang up my ride and can’t drive it?
Scamalady: That won’t happen if we plan a car accident at low speed with a slow driver. You know, like a parking lot accident with a little old lady. With four of us shopping together today, we could each make some extra cash by getting in a crash and making an insurance claim on your policy.
Phonia: What! That doesn’t make sense. How do you make money off my insurance?
Scamalady: Geez, girl. Get real! Don’t you know that your personal injury protection insurance covers your passengers, too? It’s called PIP, and it’s also called no-fault insurance. Doesn’t matter who is at fault because your insurance company pays. Hey, lucky us! There’s a little old lady going to her car right now……
More than 200 people showed up at the auto fraud summit in Miami, and they heard several stories of auto insurance fraud. Most of those attending were insurance agents who are just as disturbed by rising auto insurance rates as their policyholders. They know companies have been paying insurance claims for suspected staged accidents because the law requires claims to be paid within 30 days. They also know that it is unscrupulous medical clinics and attorneys making money off the “$10,000 entitlement” – not necessarily the perpetrators of the fake crashes. Frivolous lawsuits also drive up claims payouts and, ultimately, the price we all pay for insurance. There were three fraud summits held around the state in recent months to discuss ways to close fraud loopholes that enable people to turn minor car crashes into major paydays. Expect change.