Although there are ways to help lower your monthly premium, you can’t always counteract the rise in payments caused by fraud. Auto insurance fraud affects every policyholder and contributes to higher premiums every year. When one driver lies or submits a false claim, everyone else pays for it.
Unfortunately, many insurance holders commit some kind of fraud, even unintentionally. Any lie on your claim or application is a fraud, and that could affect your and everyone else’s premiums. Avoiding insurance fraud is the best way to keep everyone’s monthly payments as low as possible.
What Counts as Auto Insurance Fraud?
Recognizing insurance fraud isn’t always easy. Many drivers think that a small lie on an application or claim won’t affect the process that much. But it can cost other insurance holders thousands of dollars a year. Common examples of insurance fraud include:
- Lying about where you live on an insurance application
- Including pre-existing damage on an insurance claim
- Lying about your previous driving record when applying for insurance
- Falsely reporting a theft
Some drivers try to lie on their applications or claims to help reduce their own premium or increase their claims payout. However, this causes increased payments for everyone else. Even if one driver commits fraud, they’re still likely getting higher payments because of the fraud of someone else.
How to Identify Fraud
As a policyholder, it’s also your responsibility to keep an eye out and report fraudulent behavior. Keeping other drivers honest can keep your monthly payments low. Drivers may try to cause an accident to cover the cost of unrelated damage or injuries.
If you see someone practicing unsafe driving methods, do your best to avoid them. If you suspect someone is committing insurance fraud, you can submit an anonymous tip to the NICB Hotline (1-800-TEL-NICB) or the Maryland Auto Insurance Hotline (1-800-500-0333).
Tips for Avoiding Fraud
The best way to avoid auto insurance fraud is to always be as honest as possible when applying for insurance or submitting a claim. If you’re having trouble affording insurance or getting a claim approved, there are resources available. MAIF can help you find affordable Maryland auto insurance and will work with you to help you understand the claims process. Getting help from an outside source is always better than trying to lie your way through the system.
The Real-World Consequences of Committing Fraud
Many people don’t understand the severe penalties that come with getting caught committing insurance fraud. It’s far more serious than just having a claim denied. You could face:
- Legal Repercussions: In Maryland, insurance fraud is a criminal offense that can be charged as a felony. This can result in hefty fines, probation, and even significant jail time. A criminal record can then make it difficult to find employment, secure housing, or obtain loans in the future.
- Financial Fallout: Beyond legal fees and fines, you will likely be required to pay restitution to the insurance company for any funds paid out on the fraudulent claim. Your insurance premiums will also skyrocket, and you may be placed on a high-risk list. This can make it difficult and expensive to get coverage for years to come.
- Loss of Coverage: Perhaps the most immediate consequence is that your current insurance policy will be canceled for misrepresentation. Once you have a fraud cancellation on your record, finding another willing insurer becomes an immense challenge. This can potentially leave you unable to legally drive.
How to Protect Yourself from Becoming a Fraud Victim
While it’s important to avoid committing fraud, it’s equally important to protect yourself from being targeted by fraudsters. Organized rings often stage accidents or make false claims against innocent drivers.
Be aware of common scams. Learn to recognize “swoop and squat” (a car cuts you off and slams on its brakes) or the “drive down” (a wavering driver entices you to pass before accelerating into a collision). Be extra cautious in parking lots where “sideswipe” scams are common. If an accident feels staged, it might be!
After any collision, use your smartphone to take extensive photos and videos of the scene, all vehicles involved, license plates, and the other driver(s). Note specific details and get contact information from any witnesses. This evidence is your best defense against a false claim.
Also always report suspicious behavior. If you think you were targeted in a staged accident or are contacted about a claim that seems fake, report it immediately. Contact your insurance company’s special investigation unit (SIU), the National Insurance Crime Bureau (NICB), or your state’s insurance fraud bureau. Your vigilance can help stop criminals and protect other drivers.
What to Do If You’ve Made a Mistake on Your Application or Claim
Honesty is always the best policy, even if you’ve already made an error. If you realize you’ve provided incorrect information, it’s not too late to correct it.
Contact your insurance agent or company as soon as you discover the mistake. Proactively correcting an error on your application, such as an inaccurate address or an undisclosed driver in the household, shows good faith. While your premium may be adjusted, this is far better than the alternative of having your policy voided later.
If you’ve already submitted a claim and realize you included inaccurate information or exaggerated a loss, notify your claims adjuster right away. Withdrawing the claim or amending it to reflect the truth can prevent a formal fraud investigation and the severe consequences that come with it.
If you’re confused about the application or claims process, reach out to your insurer for clarification. Companies like MAIF are there to help you understand your policy and obligations. It is always better to ask a question than to guess and risk committing fraud unintentionally.
Get Help With Auto Insurance Questions Today
Many drivers commit auto insurance fraud unknowingly simply because they don’t know the process for insurance claims or applications. Staying aware of the policies and systems is the best way to avoid fraud. At MAIF, we’re here to help all Maryland drivers stay safe and honest. If you have any questions about your auto insurance policy, contact us today.