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In order to protect yourself from being a victim or an unwilling participant in insurance fraud, it is important to be aware of common insurance fraud schemes.

Automobile Insurance Fraud

Automobile insurance fraud in California has historically taken several forms. The most common fraud schemes involve automobile property and automobile collisions.

Automobile Property

This type of fraud can involve dishonest auto body and repair shops and/or insurers who may employ a variety of illegal or questionable techniques including:

  • Reporting parts of vehicles as damaged or lost when in fact they were not damaged or lost prior to the shop receiving the vehicle.

  • Charging an excessive final cost as compared to the original estimate of damage.

  • Listing charges for repairs on the billing statement that were not authorized.

  • Billing for Original Equipment Manufacturer (OEM) parts, when after-market or salvaged parts were used.

  • Billing for OEM parts when bondo is used to make repairs.

  • Falsely reporting vehicles as stolen, burned or vandalized in order to collect insurance monies or obtain repairs for previous damage.

  • It is always important for the consumer to carefully review all paperwork from an auto body repair shop in order to protect against potential fraud.

Automobile Collisions

Automobile fraud often involves organized criminal rings. Stagedauto collisions follow several basic schemes including:

  • Sudden Stop - The driver of the vehicle in front of you stops suddenly for no reason, causing you to rear-end the vehicle.

  • Swoop and Squat - A fast moving vehicle swoops in front of the vehicle in front of you, causing that vehicle to brake suddenly, causing you to collide into the "victim" vehicle. A third vehicle has also forced you to remain in your lane so that you cannot avoid the collision.

  • Stuffed Passengers - Passengers who were not in the vehicle at the time of the collision.

  • Right of Way Collision - An on-coming driver gives you the right of way and waits for you to enter the roadway, and then purposely causes a collision.

If you have been in an auto collision, be cautious of any unsolicited referral to an auto body shop, law office or medical office. Consumers should also be cautious of any auto body or repair facility that makes referrals to medical or legal offices. Organized collision rings and "cappers" actively solicit others in the community to participate in "paper collisions." These collisions only exist on paper and generally innocent parties are not involved. Paper collisions have gained popularity among fraud perpetrators, as they are less dangerous from a bodily injury standpoint, and there is less likelihood of police involvement.

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