Auto insurance fraud comes in different shapes and sizes

Car Insurance Zip CodesAccording to industry experts, it is not at all uncommon for people to make false claims about their vehicles – from claiming that their luxury cars are farm vehicles to under-stating their mileage – in order to try to keep their car insurance premiums down, which does trickle down and affect the honest consumer.

The result of this fraudulent behavior is making it increasingly difficult for a good driver to find auto insurance at a cheaper rate.

According to spokesperson, Pete Moraga, from the Insurance Information Network of California, insurers and policyholders who are altering the truth (or flat-out lying) are playing “a cat and mouse game.”

Quality Planning performed geocoding to identify the location of the address where the 80,000 vehicles were registered for farm-use discount in 2010. Among them, 6,382 vehicles – that’s eight percent – were discovered to be housed in ZIP codes where the most recent U.S. census data indicated that fewer than 1 percent of the population participated in agriculture.

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This form of insurance fraud is as common as it is because auto insurance companies offer discounts of up to 20 percent for farm-use vehicles and/or rural zip codes.

Examples of this type of fraud could be seen as an Audi being claimed as a pleasure use vehicle and garaged in a small town, which is not the case at all. The Audi lives within a busy metropolis area, making the probability of theft and accidents much higher, and being driven in the course of business – not pleasure use at all. This can knock of hundreds of dollars a year from the owner’s insurance policy.

Senior vice president Robert U’Ren at Quality Planning explained that the result is that “Honest people end up subsidizing the insurance premiums of dishonest people.”


Liberty Mutual Insurance

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