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Staged Accident Insurance Claims Rise 46 Percent

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Joel Ohman
Founder, CFP®

UPDATED: Mar 13, 2020

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As if the economic recession isn’t bad enough, the National Insurance Crime Bureau recently released a report showing that fraudulent claims from staged accidents jumped 46% from 2007 to 2009.

Over this same period, the ratio of staged accident QCs (questionable claims) to overall bodily injury (BI) and personal injury protection (PIP) insurance claims has increased while the total number of BI and PIP claims has declined.

In other words, despite fewer overall drivers on the road (as a result of the stalled economy) and therefore fewer accidents, the problem is still growing.

These staged accidents cost car insurance companies millions of dollars, whether or not the claim is actually paid.

The cost to simply investigate and determine that a claim is fraudulent can be staggering – remember, insurance adjusters don’t work for free.

Worst Areas for These Fraudulent Claims

Not surprisingly, the same areas of the country that have the highest incidence of vehicle theft are the same problem areas for the QCs.

According to the NICB, the top five states that generated the most staged accident QCs were (1) Florida, 3,006; (2) New York, 1,680; (3) California, 1,619; (4) Texas, 792; and (5) Illinois, 433.

The five cities that generated the most staged QCs were (1) New York City, 1,304; (2) Tampa, 562; (3) Miami, 511; Orlando, 422; and (5) Houston, 376.

What This Means to You

Higher car insurance rates will be the likely outcome of this troubling finding, as insurers push the costs onto consumers to pay for these illegitimate claims.

Additionally, the need to purchase uninsured motorist coverage (UM) is increased, as the people who attempt to file fraudulent claims may not have coverage of their own, and even if they did, their insurer may deny your claim, as it was caused during the commission of a crime, which is a common exclusion on car insurance policies.

Without UM, you may be out of luck getting your car fixed or getting reimbursed for medical bills in the event you are the victim of one of these schemes.

Contact your insurer or insurance agent if you aren’t sure your policy contains this particular coverage.

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