Drivers who can no longer afford their cars turn to auto theft fraud
Mary Lou Jay
Some vehicle owners who've suffered financial setbacks in the difficult economy have taken an unusual -- and illegal -- approach to recouping their losses. They're committing auto theft fraud by claiming their vehicles have been stolen in hopes of getting some cash from their auto insurance companies, according to the National Insurance Crime Bureau (NICB).
A 2008 report on auto theft prevention from the National Conference of State Legislatures estimates that at least 10 percent of all reported thefts are fraudulent. Vehicle owners who decide to "steal" their own cars or trucks take several approaches:
- Owner give-ups. This is one of the most common forms of car theft fraud. The owner simply drives the vehicle to a remote location and abandons it, or pays another unscrupulous person to take it away. The NICB reports that the number of owner give-ups increased 24 percent from 2008 to 2009 -- and many of these give-ups corresponded with rising gas prices.
- Export scams. Some owners will arrange with thieves to export their cars to another country and sell them. The owner then reports the car stolen and files an auto insurance claim when it is safely overseas.
- Other so-called vehicle owners use a vehicle identification number (VIN) or a title from a stolen or salvaged car to create a "paper car" and insure it. Then they claim the car has been stolen and file an insurance claim.
- Some owners bent on fraud even take out policies on the same car from several different insurers, figuring they'll hit the jackpot when they make their theft claims. They may purchase insurance for valuables (like coats, jewelry and electronics) and then claim they were in the vehicle when it was "stolen," according to Louisiana's Insurance Fraud Unit.
Insurance fraud investigators also have developed a list of red flags that signal an increased likelihood that a vehicle theft claim is fraudulent. Louisiana's Insurance Fraud Unit, for example, recommends taking a harder look at a claim if:
- An owner has lived at an address or held a job less than six months.
- The car is newly insured.
- The owner has just increased coverage.
- The insured person resists meeting with insurance claims adjusters.
Although some might assume that auto theft fraud hurts no one but insurance companies, it harms every vehicle owner in the long run -- because increased costs for insurers ultimately result in increased auto insurance premiums for all policyholders.