Consumer Alert: Insurance Fraud is Costing You
Phoenix, Ariz.,
March 24, 2008 – From staged auto accidents to the sale of fake Medicare cards, insurance fraud is an increasing problem across the state and country. In recognition of March being Fraud Prevention Month, AAA Arizona would like to shed light on this crime that is estimated to cost the average Arizona family an additional $300 per year in increased premiums.
Insurance fraud can be committed against policyholders or insurance companies. It occurs when a person intentionally deceives another about an insurance matter to receive money or other benefits to which they are not otherwise entitled. Since insurance companies divide the costs of claims among policyholders, fraudulent claims force increased premium costs for all policyholders.
Insurance industry studies reveal that 10 percent or more of property/casualty insurance claims are fraudulent. This equates to approximately $30 billion a year, according to the Insurance Information Institute (III). The most common insurance frauds include "padding" actual claims; misrepresenting facts on an insurance application; submitting claims for damage or injuries that never occurred; and "staged" accidents, per the III.
“Anyone with an insurance policy has felt the adverse effects of insurance fraud,” said John Lawson, AAA Arizona vice president of insurance services. “And because this affects everyone with an insurance policy, it is important for consumers to know that this is a real and serious problem that authorities cannot fight without their help.”
The best way to fight insurance fraud and the criminals who commit it is to remain alert and follow the proper procedures should you become involved in or witness an auto collision. AAA Arizona also advises consumers to:
- Be aware of possible fraud schemes. If you are involved in an accident and are approached by someone who suggests a doctor or lawyer who can help you “make money” or by a mechanic who offers to “bury” your deductible by inflating the estimate, do not accept these offers. Scenarios such as these are likely fraud schemes.
- Report accidents and losses. Report accidents to the police, whether you are involved or are a witness. If you are involved, let your insurance company know, regardless of who was at fault. Your report is important to establish the legitimacy of your claim, as well as to determine if claims made by others are fraudulent.
- Record pertinent information. If you are involved in an auto crash, keep a record of what happened and what was said. Get the names and phone numbers of all involved parties, passengers and witnesses, along with the name of their insurance company. Keep a disposable camera in your glove compartment so that you may take pictures of any damage to vehicles immediately after a collision.
- Report suspicious approaches to authorities. If you are approached with a fraud scheme, report it! Call the Arizona Department of Insurance Fraud Unit at 602.912.8418 and keep your records of the incident. Your report can be enough evidence to initiate an investigation.
AAA Arizona, the Arizona affiliate of AAA, provides automotive, insurance and auto travel services to nearly 775,000 Arizona members. Annually, AAA’s Emergency Road Service responds to more than 450,000 calls for help on the streets and highways of the state as well as providing insurance, travel, and financial services to AAA members and motorists. Since its founding in 1927, AAA Arizona has been a leading advocate for the safety and security of all travelers.
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