California Takes Auto Insurance Fraud Very Seriously

All 50 U.S. states and Washington D.C. have to deal with some level of auto insurance fraud, but California is getting serious about cracking down on it. How serious? The state isn’t waiting for the fraud tab to reach into the tens of millions of dollars to take action. Case in point…195 individuals were recently arrested in a massive network of auto insurance fraud. Of those busted, 54 operated throughout the Bay Area, involving phony claims estimated at over $250,000.

While $250,000 may seem like small potatoes compared to some of the multi-million dollar losses incurred in other states, such as New York, it goes to show just how serious California is in busting anyone involved in auto insurance fraud. As a matter of fact, this should be a warning to would-be scammers who think they can pull off even the smallest fraud – you will get caught. And, the odds are – you’ll be going to jail.

It goes without saying; the auto insurance industry takes a dim view of anyone with the intent to defraud them with false or exaggerated claims. As a result, a widespread auto insurance fraud investigation was conducted within the state after a rash of falsified claims submitted to insurers caught the attention of officials at the California Department of Insurance.

Detectives from the Department of Insurance worked in conjunction with the district attorney’s office in several regions of the state – Santa Clara, San Francisco, Contra Costa, Alameda, and Solano, and along with local law enforcement agencies, took part in the extensive investigation. According to officials, the majority of the auto insurance fraud claims involved uninsured or underinsured motorists who had recently changed their coverage status.

In other words, the claims were made by previously uninsured or underinsured drivers who then purchased coverage or altered their policies after having experienced some damage to their vehicles following a traffic collision. The pattern of the fraudulent scam was discovered either ahead of the claim payment or shortly after the claim had been paid.

Evidently, the alleged scammers made their claims on uninsured vehicles, believing authorities wouldn’t notice. They were wrong. And, at last count, 44 defendant cases were filed in the Bay Area, 14 in Santa Clara County, 22 in Alameda County, 7 in Contra Costa County, as well as 2 in San Francisco, and 1 in Solano County, with more pending.

California state insurance officials also stated that the 195 total arrests netted from the fraud investigation spanned 22 counties. Furthermore, those involved approximately $75,000 in actual losses, along with an additional sum of over $1 million in potential losses. Participating in the scheme were two professionals from the insurance industry, who conspired in some of the cases authorities had investigated – not to mention a car allegedly used to transport illegal drugs from Mexico, a fatal accident with a pedestrian, and a staged collision.

The crime of auto insurance fraud has many consequences. One of the main effects is that we pay higher premiums as a result of it. All states are cracking down and prosecutions are up. While the scams and schemes can’t be completely eliminated, the auto insurance industry hopes to take a major bite out of their annual losses by going after anyone who tries to defraud insurers.

Because we tend to pay more due to the fraudulent activity of others, you might want to make sure you’re getting the best rate on your auto insurance. Why not get a free auto insurance quote today?

What do you think of the state’s crackdown on auto insurance fraud? Feel free to share your thoughts in the comments section below.