California Experiencing Increase in Automobile Insurance Fraud

The state of California is reporting a dramatic upswing in fraud cases that involve automobile insurance policies.

According to state insurance commissioner Steve Poizner, suspected insurance schemes involving both theft and arson have increased considerably in the past year. Other states such as Nevada have reported a similar trend, which is thought to be due to the recession and consumer problems like unemployment and unmanageable debt loads.

Suspected vehicle arson cases were up 25 percent alone last year.

A common tactic is for consumers to try to avoid paying for vehicles they can no longer afford by reporting them stolen after torching or otherwise abandoning them. However, people who are caught engaging in insurance fraud can often expect fines and other legal costs far in excess of the amount they would have saved in such schemes.

"Department of Insurance investigators have seen an increase in suspected automobile arson and theft fraud cases recently, and our enforcement experts are working hard to crack down on anyone attempting to skirt the law for financial gain."

Another problem presented by such schemes is the added costs they create for automobile insurance companies, resulting in higher rates for consumers.