Auto insurance fraud crackdown planned in Michigan

Auto insurance fraud

The state intends to expand its efforts to put a stop to fake coverage certificates.

According to Ruth Johnson, Secretary of State, she and law enforcement in Michigan are working together with the auto insurance industry in order to considerably expand crackdown efforts on fake certificates that are being used to obtain vehicle registrations.

The fraud that was discovered by Johnson and her department had a staggering rate of 16 percent.

Johnson explained that her department had found a 16 percent rate of auto insurance fraud within a single day snapshot that was taken on July 31 of the 15,000 registration renewals that took place at the various branch offices throughout the state. That spot check was assisted by an additional law that now requires that vehicle insurers provide Johnson’s office electronic verification of coverage on a bi-monthly basis.

Auto insurance fraudThe auto insurance fraud through fake certificates is occurring throughout the entire state.

According to Johnson, “This is not an urban or regional problem,” but explained that “We had fakes and forged copies turn up in more than half of Michigan’s 83 counties.” In fact, almost thirty drivers across the state used an auto insurance certificate that included a computer code that linked to a website which contained only the words “Llamas are sooo cool.”

The new crackdown program, which is called the “Fighting Auto Insurance Rip-Offs” program, will involve the participation of state officials, leaders of the insurance industry in the state, prosecutors, and Michigan State Police. This effort will also involve special training of the staff at vehicle registration offices in order to help them to be able to spot fake certificates, and will implement aggressive registration suspensions for vehicles involved in this fraud.

This year, over 4,000 vehicle registrations were suspended as a result of having been identified as auto insurance fraud participants. This is a tremendous increase over 2011, in which only 431 registrations were suspended for that same reason, according to Johnson’s figures. She also pointed out that while some drivers purchase fake certificates on purpose, there are others who don’t even know that their coverage is false until they try to file a claim. It is important to put a stop to both of these scenarios, as a lack of real coverage is contributing to millions of dollars of expense to the state’s no-fault system.

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