Staged accidents are one of the biggest problems that car insurance companies currently face. Fraud from across the board may cost insurance companies up to $30 billion in expenses in one year alone!
Every year, it has beenestimated that about 10 million car accidents are reported to insurancecompanies all over the country. What is alarming and saddening is that while asignificant number of these are actual accidents, a significant number are fake.
What do we mean by fake? Wemean accidents that may never have happened at all, or were merely staged. Whatwould a policy holder get from a staged accident? you may ask. Well, easy moneyfor one thing. Individuals who are desperate for some quick cash may try to getit with a few dents or scratches to their vehicles. In fact, staged accidentsare one of the biggest problems that car insurance companies currently face.Fraud from across the board may cost insurance companies up to $30 billion inexpenses in one year alone!
There may be those who believethat with this $30 billion loss, only the insurance company is affected. Otherpolicyholders and “ordinary people” are not affected at all. In fact, some mayeven go so far to say that since these companies are raking in so much moneyalready, then they can easily shoulder this expense, and still have plenty leftover for their yearly profits.
We’re here to tell you this isan extremely wrong way of thinking. Staged accidents and insurance fraudultimately affects all of us. How? Well, insurance companies need to find waysto raise money to cover the costs of insurance fraud. So, what do they do? Themost logical thing for them to do is to raise the cost of premiums all acrossthe board. Yes, no one is exempted. The loss in money is partly shouldered andpassed down to auto policy holders.
In fact, when staged accidentsand insurance fraud are proven, the effects could be very bad, not to mention veryexpensive for everyone else. To give you an example, a series of fake accidentswere uncovered in New York City from the years 2007 to 2009. As a result,insurance premiums in the Big Apple rose up to four times as much, compared tothe previous years! Altogether, the amount that everyone had to pay was around$229 million, or an average of $628,000 per day!
When someone decides it’s agreat idea to stage an automobile accident in order to get easy money, whatthey do not consider is how it affects everyone else. These people may notpersonally pay now, but they will in the coming years, through ridiculouslyexpensive premiums, especially for them, since they will be put under a new riskcategory. The sadder reality is that because of one or a few persons’ thoughtlessactions, everybody has to share the burden of paying for higher car insurancecoverage. At the end of the day, just don’t do it! It really isn’t worth it!Some petty cash that you will get today will still result in many years ofpaying for it!
Sam Briones is a freelance writer who covers topics ranging from findingthe best car insurance to driving safety tips.