Last year, Direct General Insurance was billed seven times by a Fort Myers Chiropractic Center for treating a patient- William Perez- Leon’s injuries that he sustained in a car accident. The bills would have been alright, except that William Perez-Leon was not involved in any car accident.
Surprisingly, he was in prison at the time the chiropractic center billed the insurance company. After the fraud came to light, three members of the chiropractic center were arrested. They are now cooling their heels in jail.
Auto insurance fraud is a big problem in Florida. In fact, the National Insurance Crime Bureau has named Florida as one of the top five states for auto insurance fraud (the others are California, Texas, New York and Maryland). The end result of all this is that Florida has one of the highest annual auto insurance premium rates in the country.
The average Floridian pays $1,784 each year just for auto insurance. That is more than twice the auto insurance premiums paid by citizens of states like North Carolina and Massachusetts.
This is how it works: Insurance fraud results in higher claims. Even then, insurance companies need to ensure that all policy holders will be covered in case of an accident. So they have no other option but to increase the premiums (the cost of the fraud is built into the premiums).
Insurance is dependent on shared risk. This means that as the number of claims increase, the rates that everyone pays also increases. Here is a clearer picture of auto insurance fraud.
How does auto insurance fraud occur?
There are two ways people indulge in auto insurance fraud. One, they bill the insurance company for treatments or repairs that were never performed. Second, they overcharge or (in the case of vehicular damage) replace OEM parts with counterfeit parts, but charge for OEM parts. The tragedy is, if the hapless victim gets involved in another accident in the future, the counterfeit parts may fail to function, putting his or her life at risk.
Take the example of counterfeit air bags. An unscrupulous mechanic may replace an original air bag with a counterfeit one during repairs. This is a two edged sword. Not only does the insurance company pay for phony repairs, the car driver is also given an unsafe car.
If you have questions about your auto policy, or want to search for the lowest rate possible, our experienced agents will shop your policy with our reputable insurance providers to find available discounts for your car insurance policy. You can contact us, here.
