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Insurance has become an integral part of modern life as it implies protection of any property and life. In fact, these days, a person can insure almost everything. It has become a reason for a great number of frauds associated with insurance. One of the most common types of fraud is auto insurance fraud as nowadays car insurance is compulsory practically in all countries around the world. Therefore, a topic of the current paper, namely fake crashing fraud, is extremely relevant and important. At the present time, there are different types of auto insurance fraud such as provision of false information about the accident, insurance of already wrecked cars, and others. In the paper, a case of a false car accident is studied. The accident happened in California and involved two drivers who agreed on fraud in advance. However, despite the tricks of swindlers, their shady deal failed. In order to collect information about auto insurance frauds and this particular case, several credible sources were used. They helped thoroughly examine the notion of auto insurance and the ways of protection from fraud.

Fake Crashing Fraud


Insurance is a particular type of economic relations intended to ensure protection of organizations and people as well as their interests from different types of dangers. In a broad sense, insurance includes various activities aimed at providing protection. In a narrow sense, insurance is the relationship between the insurer and the insured directed at defending the property interests of the latter. In the event of damage or loss, the insured obtains compensation, provided they have regularly paid insurance premiums. Nowadays, there are many cases of insurance fraud. Meanwhile, auto insurance fraud is especially popular among cheaters. Definitely, cases of providing false information about car accidents are very widespread. Therefore, the purpose of the paper is to examine auto insurance fraud related to fake crashing and discuss the ways of avoiding it.

The Type of Fraud

Insurance fraud is any illegal act committed with intent to receive compensation from the insurer. It is based on a distortion of the circumstances of the traffic accident. It should be admitted that insurance fraud is a rather serious problem in many countries around the world. In the book Exposing Fraud: Skills, Process, and Practicalities, Ian Ross and Jose Chacko (2015) state that “any form of insurance fraud is illegal and damaging to the insurance company” (p. 116). The point is that compulsory insurance of cars provides that the policyholder may receive payment an unlimited number of times. Consequently, insurance fraudsters have quickly realized that, with the help of auto insurance, they can enrich themselves at the expense of the insurance companies. Thus, 70% of all cases of insurance fraud fall on the car insurance (Bender, 2009). In such a way, this type of fraud is particularly popular.

There are several types of auto insurance fraud, including insurance of already wrecked cars and a statement of damages that are not related to the insurance event. The fraud analyzed in the paper belongs to a scheme which is rather widespread among fraudsters. It is a case of provision of false information or, in other words, falsification of car accident. This type of fraud is especially popular nowadays as it does not require any specific preparation. A fraudster only needs an already damaged car. In addition, in some cases, the third person who is not aware of the accident can be involved. That person will be a victim of fraud. However, the fraud under discussion has involved only two drivers who have devised the scheme.

Details of the Crime

Several residents of California devoted few years to the development of the schemes that would help them earn income by virtue of car insurance payments. One of them was a director of the department store while another one was an employee working there. They were found guilty of organizing a fictional traffic accident. Hence, for the purpose of illicitly obtaining considerable insurance compensation, offenders staged a traffic accident in California in August 2012 (Zweifel & Eisen, 2012). In this accident, a truck and a passenger car were involved. As a result, the driver of the truck crashed into the passenger car and squeezed its side door. The truck driver fully admitted the guilt. It was a definite insurance case. In reality, the car accident was fake as the truck stopped several centimeters before the passenger car. Nonetheless, the drivers of both cars agreed on the fact that the truck allegedly crashed into the car. Then the driver of the car demonstrated a dent, which was obtained in the previous car accident. However, for that accident, the insurance compensation had already been paid. Despite this fact, the goal of fraudsters was to receive another payment. It is not a secret that insurance companies often have to pay car owners fairly large sums of money even when, in fact, a real insurance case is absent but the documents suggest otherwise. The fraudsters in California were sure that the insurance company would compensate them for the accident. Definitely, scammers perceived dramatization of an accident as a means of enrichment. The plan of fraudsters presupposed that the insurance company would pay a large sum, which would be divided between the two drivers (Zweifel & Eisen, 2012). However, the plan ended in failure. Before the insurer could pay compensation, the police were able to establish that the vehicle allegedly crashed in the case was previously damaged in another accident, which occurred in a neighboring region. After the presentation of investigation materials confirming the fact of illegal acts to the insurance company, the insured issued a statement in which they renounced the insurance compensation (Zweifel & Eisen, 2012). It is necessary to note that such a fraud can be exposed only in the cases where the nature of damage does not coincide with the accident circumstances specified by dishonest drivers. The main difficulty for scammers obtaining payment in a fraudulent way is not to damage a car. As it was already mentioned, the owner of a broken car had already received compensation under the policy of comprehensive insurance. In addition, the insurance company proved it.

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Simultaneously, security service of the insurance company intervened in the situation. In respect of the drivers, the service check was conducted. During the check, concerns about the legality of the documents submitted were confirmed. Therefore, on the basis of the facts revealed by the company’s security service, the police opened a criminal case against people engaged in fraudulent activities (Zweifel & Eisen, 2012). Later, a criminal case was brought and its investigation extended several times. Finally, the criminal case went to court. Eventually, having carefully considered evidence, the judge pronounced sentence. In accordance with the verdict, the two drivers were accused of fabrication of the accident and were found guilty. However, the drivers continued to convince the court that the insurance case was real. Thus, the fact that they did not plead guilty to committing fraud served as an aggravating circumstance in their sentencing.

Without doubt, cases of auto insurance fraud have a great influence on the formation of the insurance market. In the book The Fast, the Fraudulent & the Fatal, it is stated that “fraud hurts everyone. Not just the insurance companies effected but every citizen” (Bender, 2009, p. 5). Even if people do not meet with accidents on the roads, minor and serious cases of insurance fraud increase overall consumer contributions, even if it is not necessary. According to average estimates, auto insurance fraud adds $13-18 billion to annual insurance payments, which Americans have to pay out of their pocket (Bender, 2009). In such a way, it can be seen that car insurance fraud is an extremely serious issue.

How We as Public Could Have Protected Ourselves from the Fraud

Although insurers have already explored virtually all the tricks used by the fraudsters for obtaining compensation unlawfully, it is still uneasy to struggle with swindlers. Firstly, premeditated fraud is often based on the fact that all presented papers are in perfect order. Therefore, it is quite difficult to prove a fraud case in court and an insurance company is frequently forced to pay compensation. Nevertheless, insurers try to bring clever swindlers to justice especially when all the circuits are already known. Moreover, it is not difficult to recognize them. However, insurance companies meet numerous obstacles on the way to solving crimes connected with auto insurance. Undoubtedly, people should protect themselves from fraud. With regard to the case studied, it is very fortunate that the scammers have not attracted a third party as it often happens. It is known that there is a widely used method called “box,” which involves two cars of intruders – a car that needs repair at the expense of another person and a car of the “assistant” with good driving skills. In this case, it is extremely difficult to prove that it is fraud. Therefore, it is important to be able to defend one’s rights. For this purpose, a driver should be aware of the methods used by swindlers. A person must carefully read the documents when registering insurance. The first rule of every driver is to ensure his/her safety, be alert, attentive, educated, and competent. In addition, to understand the intricacies of the particular insurance event, it is necessary to have legal knowledge as well as knowledge of the insurance law and practices of claims settlement in the insurance business.

Generally, an average policyholder makes attempts to embellish, exaggerate, or change some details of the case. Almost everyone believes that adding some false facts to the record of insurance event will not cause any troubles. Contrary to this popular belief, such tricks do not go unnoticed by an insurance company, especially the one where professionals work. Such an exposure ends with failure to get compensation, protracted court lawsuits, or criminal prosecution as in the case studied. In such a way, to protect themselves, people should know the law, carefully study all the contracts that they sign in the insurance company, and avoid giving false information in any cases.

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These days, insurance fraud, which is widespread in many countries, inhibits the development of the insurance market. Unfortunately, it adversely affects the insurance companies in particular and the economy in general. Meanwhile, auto insurance fraud confidently occupies a leading position. Insurance fraud exists in the automotive industry since the time when insurance has first become available to consumers. Unscrupulous citizens use various tricks to increase the number of insurance payments. It does not apply to law-abiding citizens. However, those who plan to receive insurance benefits by means of fraud are not indifferent to such schemes. Therefore, auto insurance fraud has become a real problem. What is worse, it leads to the decline of confidence and the growing discontent of consumers with insurance services as the burden of tariff increases and there is more intense and prolonged consideration of insurance claims by insurance companies. Without doubt, fraud is a serious threat to the insurance companies, which annually pay compensation to scammers based on false insurance claims. There are different types of fraud associated with car insurance. Meanwhile, accident simulation is particularly common among fraudsters. The case studied demonstrates that swindlers have carefully staged a traffic accident. Nevertheless, during the inspection, the security service staff has established that the accident was rigged, and the vehicle of the “victim” was already damaged.

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