REPORT: Tough times yield more insurance fraud cases
They're called owner "give-ups," and their rise is a sign of the tough economic times. Despondent over being financially strapped and unable to cover car payments, vehicle owners are ditching, sinking, or torching their vehicles and reporting the loss to collect insurance payoffs. According to authorities, most of the titleholders aren't seasoned criminals. In fact, many of the false claims are filed by first-time offenders -- people who normally wouldn't steal a piece of candy from a store. However, the desperate owners see insurance companies as "rich and fat," says James Quiggle, a spokesman for the Coalition Against Insurance Fraud. Many think the insurance companies won't miss a few dollars.
Well, of course they will. Owner "give-up" cases result in felony charges of insurance fraud, making false statements to police and insurance providers, and arson if the car was burned. A better solution for cash-strapped owners, say experts, is to attempt to renegotiate payments, sell the car, or trade it in for a less expensive model. While you generally won't come out ahead, those transactions are legal and they'll keep you out of the slammer.
[Source: Detroit News | Image Source: Mark Dadswell/Getty]
Reader Comments (Page 1 of 2)
Alex 9:07AM (6/30/2009)
And you jerk-offs are causing my rates to increase to cover for your dumb ass!
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DjDATZ 9:30AM (6/30/2009)
Or maybe, auto insurance companies should stop RAPING people with ridiculous rates?! What a novel idea.
If a government mandates that everyone be insured, shouldn't the government mandate or subsidize the rates themselves?
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Rick C. 10:11AM (6/30/2009)
When you get below the surface of this issue, philosophically, socially and politically, this is classic 'little guy' vs the 'big guy'. And so the battle rages on...
DjDATZ 10:13AM (6/30/2009)
It's true. :*(
Alex 10:26AM (6/30/2009)
To be honest, i don't see the rates i am paying as overly high. My reasoning is this, I had a collision with a deer that resulted in nearly $15,000 in damage to the car. It will take my insurace company close to 8 years to recoupe that money from me. Now imagine if i *god forbid* hit a person. The costs for that person's hospital bill would be astronomical not to mention the legal battle that would likely ensue.
I don't work for an insurace company, and I don't represent insurance companies, I don't even know anyone who works for an insurance company. All i'm saying is, I understand the rates they charge.
Redeemed 10:51AM (6/30/2009)
Here in the tri state area, they could double rates tomorrow and it still wouldn't be high enough to cover all the terrible drivers.
DjDATZ 11:12AM (6/30/2009)
@Alex Agreed. Then again, I live in Canada, where it is relatively hard to get "extra" damage claims from a car-vs-person accident, other than payments for medical treatments.
SimbaDogg 1:03PM (6/30/2009)
low rank him if you will...but honestly, insurance companies are a joke. in any other industry, what they do would be called highway robbery. i have a honda s2000 (high insurance) am a young driver (25, higher) and a male (even higher)...but in no way should it be justifiable to have someone drive 7 mph over the limit (57 in a 55) and see their insurance shoot up from 173 to 225 a month. Considering that i've only had about 3-4 tickets in the last 10 years that i've been driving, i think its bogus. Sure...i sped, i did the crime, so i should be prepared to pay up...but isn't that what the pricey ticket should be for? its not like i, or anyone else who goes through the same thing has a history of speeding (then again i know an idiot who has had his license suspended from speeding tickets alone...multiple times) its just a one time infraction that gets you GOUGED for over a year because of increased rates.
SimbaDogg 1:07PM (6/30/2009)
typo...should have been 57 in a 50!
DjDATZ 1:11PM (6/30/2009)
LOL, I hadn't even realised I was getting rated low... So apparently people WANT to pay more for insurance? Here, let me go get some more cars and you guys can pay for the insurance if you're so intent on it!
All I was suggesting is that governments actually legislate how much insurance companies are allowed to charge us, so that we don't have astronomical rates.
yakimushi 1:14PM (6/30/2009)
Insurance companies typically make about $0.04 on the dollar in profit. Everything else is overhead, paying claims, etc.
DjDATZ 1:29PM (6/30/2009)
@yakimushi Source? I don't think they make THAT little. I'd be willing to bet its upwards of 0.30/Dollar...
yakimushi 1:46PM (6/30/2009)
I probably should have been more specific. What I was talking about is the combined ratio. Basically it's the amount of money a company spends over the amount it's taking in. For most automotive insurance companies they try to keep that number around 96, or $.04 on the dollar profit.
What that doesn't account for is the investment side of the industry. Insurance companies then take a portion of that profit and put it away. Have to have cash on hand for catastrophe's. The rest is invested, and invested very wisely. Those investments (typically) have a much higher return than just the insurance side of the business.
Here's some links:
http://www.fool.com/personal-finance/insurance/2006/12/12/insurance-industry-basics-combined-ratio.aspx
http://www.insurancenewsnet.org/html/BreakingNews/2009/0616/BestWeek--Combined-Ratio-for-P-C-Writers-Tips-100-Mark-in-Fi.html
Ben 9:30AM (6/30/2009)
News from 1 year ago??
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SpaceGoatPriest 10:21AM (6/30/2009)
*sarcasm*
But I keep getting told the recession is over.
If times are really that bad for you, why not just forfeit (repo?) the car to the lien holder. I have never had to have a car repo'ed, so I don't know how that works.
Sure you will have a repo on your credit, but that is better than insurance fraud (which the investigators will probably figure out). The bank might even work with you and put your loan in forbearance for a few months.
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BluePariah 10:55AM (6/30/2009)
In other news... the sky appears to be blue.
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StanleyVanBuren 11:23AM (6/30/2009)
Or, you can just crash the car. Sure, it's your fault and your rates might go up, but if you really have to get money out of your car, it's a surefire non-fraud way to go. Unlike torching or reporting it stolen, there is no lie if you actually have crashed the car yourself. Find a nice tree and say you lost control. Make sure to hit it hard enough to damage the frame or something else that will be sure to total the car.
If the car books for more than you can sell it for, crashing it might just be the way to go. If you don't have any other blips on your driving record like speeding tickets or prior wrecks, the nominal increase in your rates for a first-time collision probably would still have you coming out on top.
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Protzenegger 11:29AM (6/30/2009)
Forensics can figure out within hours if you really lost control or not.
kal326 4:40PM (6/30/2009)
Lets see forensics prove that you didn't fall asleep at the wheel. Head out on a Sunday night late and run off the road into something. They going to consider that insurance fraud as well? I am by no means encouraging you to do something to fix YOUR situation by raising MY rates, it was purely for arguments sake.
Erik 11:30AM (6/30/2009)
Idiots who pull this crap should be dealt with in the harshest possible manner and given the maximum penalty.
"A better solution for cash-strapped owners, say experts, is to attempt to renegotiate payments, sell the car, or trade it in for a less expensive model."
Yea, and here's another novel idea - don't buy your car with credit. If you pay cash, you will never have to worry about any of this. That's freedom.
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