The lies that are driving up insurance costs
Lying to an insurer isn't a victimless crime. We all pay the price as our insurance costs go up!
We all pay the price for insurance fraud. These are some of the lies and scams that see us all paying extra each year – and some examples of where the swindlers didn’t get away with it!
Car crash fakers
Known as cash-for-crash scams, fraudsters driving on the roads around busy junctions, roundabouts and slip roads will suddenly apply the brakes so you plough into the back of their car (also known as ‘slam-ons’). In some cases the brake lights will have been deactivated too, so the innocent party behind never stood a chance.
The con artists then set about claiming on your car insurance policy for whiplash injuries via a no-win, no-fee claims management company.
Adding insult to a simulated injury, the fraudsters may even try to claim on your policy for people who weren’t even present at the time of the accident. On top of this are costs for the conman’s car recovery (even if it was driven away at speed post-collision), vehicle repairs for damages that existed before the crash and loss of earnings for the driver and his phantom passengers – until he or she has netted a princely sum of around £30,000 or more.
This type of activity adds £44 a year to each insurance premium, according to the Insurance Fraud Bureau (IFB) and is an area that insurance company fraud squads are cracking down on.
Zurich Insurance revealed a case of how one man staged numerous crashes at the same roundabout – charging the different vehicle owners £500 a time so they could file big fat fraudulent insurance claims.
In a nice twist of justice he was snared by another Zurich policyholder who became suspicious of the man who crashed outside his office at the same time every day – and took photos to hand to police.
Man goes missing after freak canoe accident
Sounds fool-proof doesn’t it? Tell your insurer that your husband never returned from his canoeing trip, he lays low until declared dead and then you all benefit from the £250,000 life insurance pay-out. Problem is if you’re lying low it’s unwise to have a happy snap taken of you both in Panama . . .
You might recognise this as the story of John Darwin – ironically a former prison officer – who tried to fleece his insurer by faking death and rocking up six years later with ‘amnesia’. He and his wife were both in on the con and were sent to jail after a photo of the couple turned up; dated during the time Darwin was ‘missing’.
Smaller scale life insurance fraud includes lies about identity or medical history. But every little helps - adding to the overall costs you pay for a policy.
My giant TV has been robbed!
An age-old home insurance scam involves submitting a claim for non-existent items or for damage or loss to something which is intact and where it should be. Alternatively, the person will exaggerate the claim and lie about the value of an item.
In another example from Zurich, a household in the north-east tried to claim for a flat-screen TV stolen during a robbery. The only problem was that the TV was bigger than the window the burglars had used to gain entry to the house.
Whether or not these types of claims come from deceitful or desperate households, the consequence is an increase on everyone’s home insurance premiums.
White lies on forms
You might think of telling a small and insignificant lie to get cheaper insurance, but it could invalidate your cover. And if your insurer cottons on you could be handed over to police and rejected by other insurance companies in the future. Read more in: why a few white lies could cost you a fortune.
Travel insurance fraud
Two British law graduates ended up in a Brazilian jail back in 2009 over an alleged travel insurance fraud. They were later acquitted but the tale is a reminder of how seriously holiday insurance fraud is taken.
Faking the loss of expensive gadgets or cash while abroad only serves to push up everyone else’s expenses. Travel insurance is typically cheap but most of us would like it to stay that way!
It’s not unheard of for people to orchestrate individual slips or falls where there are cracked pavements or potholes, then claim compensation from the local council.
Although this doesn’t directly push up any type of general insurance you buy, it’s a type of insurance fraud with pay-outs coming from policies held by local authorities, public bodies and companies – robbing funding from frontline public services or employers.
Three people involved in a slip-and-trip fraud in the London Borough of Havering are now facing jail. A man who claimed to have tripped on a pothole was demanding thousands of pounds after breaking his ankle. His friend called the ambulance and his dad backed up their version of events.
However, ambulance records revealed the ‘victim’ was nowhere near the pothole when he was picked up and it turns out he had actually fallen off a wall.
A new emerging trend is where people identify a qualifying hazard, such as a cracked pavement, and publicise them, resulting in multiple personal injury claims.
For more tales about people ‘trying it on’ in the most bizarre of ways read: The 10 most unusual personal injury claims.
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