Homer Smith Insurance Blog

When anyone tries to make money from insurance transactions by deception, it is called insurance fraud – whether it is by a consumer or by a company.  Insurance fraud is the second largest economic crime in the U.S. after tax evasion, according to the National Insurance Crime Bureau (NICB).  Statistically speaking, you probably know someone who has cheated in an insurance transaction.  Those committing insurance fraud range from organized criminal enterprises, to unscrupulous doctors and lawyers, to dishonest body shop operators, to your neighbors.  It costs the average Washington household $200-300 every year.  Nationally, insurance fraud costs the country nearly $80 billion a year.

Fraud comes in many forms – some common schemes include:

• "padding" or inflating the amount of a claim
• lying or hiding important information when applying for insurance (to get insurance or a lower premium)
• concealing information when reporting a loss
• submitting false claims
• "staging" accidents
• faking theft claims or not reporting recovered property
• committing arson for profit

Fraud concerns you as a consumer because the increased costs of insurance are passed directly on to you in the form of higher rates. You can play an important role in reducing fraud.

In the auto insurance arena, look out for staged accidents.   Common staged accidents occur when someone slams on their brakes in front of you, or drift in a turn to sideswipe you.  Drive defensively and if you are in an accident, write down license numbers of all cars involved in the accident, get the names and contact information of all persons involved and their insurers. Count the number of passengers in the other cars and get their names, addresses and any other pertinent information. Consider calling the police and getting a police report even if the damage is minimal. DO NOT let another driver talk you out of calling the police. You can also carry a disposable camera in your glove compartment or use a cell phone to take pictures of the damage to the vehicles and of all drivers and passengers in the cars.

A homeowner can help deter fraudulent claims by properly maintaining their home, and by removing or repairing items that could create tripping hazards to outside parties. If someone is injured in your home, be certain that you get full information and be sure that an injured person gets any needed treatment. Carefully document any incident, including all impressions about likely injury.  Be careful if people ask you to store valuable property – they could find they reported to an insurer that the property was stolen.

Insurance fraud is money out of your pocket; fraud is estimated to add 25% to property and casualty insurance rates.  If you are involved in an accident and are concerned fraud may be involved, report it to the authorities and your insurer. Washington and this Washington Insurance agency are serious about combating insurance fraud.  The Washington Legislature has created the Special Investigations Unit (SIU) within the Office of the Insurance Commissioner (OIC).  You can report your suspicions about insurance fraud at 360-586-2566