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There's no sure way to predict when accident fraud might happen, and it's not always easy to tell if you've just fallen victim to a staged accident. To avoid becoming a victim of a staged accident, watch out for suspicious driving behavior, record everything and call the cops and your insurance company as soon as it's safe.
How common are staged accidents?
It is estimated that around 10% of all property and casualty claims are fraudulent, with staged accidents being one of the most common causes of fraud.
Staged accidents can be caused by an individual, but often crime rings are responsible for dozens of accidents a year, pocketing millions of dollars from innocent victims. Insurance fraud costs the U.S. an estimated $308.6 billion per year, according to the Insurance Information Institute. And the losses due to fraud may be factored into the average cost of insurance for all policyholders, so honest drivers end up footing the bill over the long term.
One scam ring in New York defrauded insurance companies out of more than $400 million through staging accidents and misreporting insurance claims.
In a staged accident, the criminals intentionally drive an old vehicle into a stationary object, a conspirator's vehicle or an unsuspecting driver's car, then file a claim for pain and suffering under their auto insurance policy's personal injury protection coverage.
And while the targeted victim in these schemes is the liable insurance company, these incidents are also dangerous for all drivers on the road.
Red flags to watch out for:
If you think you have been in a staged accident, you can check for signs that you were the victim of a staged attack by asking yourself some questions:
Did the other driver behave unpredictably?
You pull up to an intersection to make a left-hand turn. The driver coming from the opposite direction signals you to complete your turn then drives into the corner of your car as you cross the lane. Suddenly, four people stumble out of the vehicle, claiming they had the right-of-way and complaining of neck pain.
Or you might be driving in a traffic circle when another driver suddenly slams on the brakes, causing you to rear-end their car. You've just fallen victim to a fraudulent scenario that has plagued insurance companies for years.
Were you prevented from changing lanes?
The most harmless form of accident fraud in a no-fault state is when a driver intentionally crashes into a fence or tree, then claims a deer caused them to drive off the road. In these cases, the only witness may be the driver's own passengers, who are in on the scheme.
However, in other cases, fraudsters may try to make it appear that you were the cause of an accident to ward off suspicion or to file a claim under your insurance policy. A common tactic perpetrators use is to have conspirators in two or three separate cars drive along beside you on the highway, which prevents you from changing lanes. Then, when you appear distracted, the driver in front of you will slam the brakes, causing you to rear-end them — a basic indicator of fault in most states.
Or the other driver might swerve into your lane, claiming to have seen an object in the road or a deer, which can be difficult to prove later.
In addition to the obvious danger of injury, making a claim would likely cause a rate increase of up to 33% from your car insurance company.
Were you driving in a wealthy neighborhood?
Staged accidents occur more often in urban, wealthy neighborhoods where there is an increased chance of collisions, and because drivers are more likely to have newer cars with more car insurance coverage, according to the National Insurance Crime Bureau (NICB).
Does the injury claim seem exaggerated?
Scammers will often coordinate with unscrupulous medical practitioners to exaggerate their medical claims, as well as lawyers to sue insurance companies who dispute the claim.
"We have conducted thousands of investigations of staged accident rings, and it’s not unusual to find a medical clinic at the center of them," says Frank Scafidi, director of public affairs at the NICB. "These places provide the 'cover' for the fraudulent billing and provision of medical treatments."
Are you a senior or young woman driving alone?
Perpetrators have also been known to target seniors or younger female drivers, especially ones driving alone. Scammers hope these drivers will be easier to intimidate into accepting responsibility for an accident, and they don't want to risk having any other witnesses.
Fraudsters also know young drivers don't want to risk making a claim and seeing their insurance rates rise, so young drivers are also targets in crash for cash schemes. The scammer driver will ask for cash or some other form of payment in exchange for pretending the accident didn't happen and not filing an insurance claim against you.
Do you live in a no-fault state?
Scafidi says that is because no-fault laws require insurance companies to reimburse their own policyholders for medical expenses regardless of who is at fault. While no-fault laws are put in place to benefit average drivers, they can also make quick settlements easier to get for criminals.
How to protect yourself from staged accidents
Get a dashcam. These small video cameras attach to your vehicle's dashboard and are relatively inexpensive, often less than $50. They can record what happens right before an accident or other driving-related incident and help you prove a scammer hit the brakes or didn't have working brake lights.
Document and identify. Use your phone to immediately record or photograph all damage done to the fraudster's car, as well as everyone who was in their vehicle, and record their contact information. This might be enough to prevent them from attempting to make any fraudulent claims against you, and will limit their ability to exaggerate injuries or the damage done to their vehicle.
Call the police. You should notify the police whenever you're involved in an accident in which someone claims to be injured. However, if you suspect the mishap to be fraudulent, calling the police may also deter the perpetrators, Scafidi suggests. In a non-confrontational manner, tell the others involved in the accident that you're going to call the authorities to get an official report.
Tell the police and your insurance company you suspect fraud. When the police do arrive, communicate your version of the incident to the officer filing the report in private and include your reasons for suspicion. If you truly feel you're being scammed, telling the police probably won't be enough. You'll likely need to explain your case to your insurance company, too.
Watch out for drivers behaving strangely or who look out of place. A driver repeatedly circling in a roundabout or a driver who waves you to go when they have the right away could be setting you up for a scam. Older cars and cars with dented bumpers or broken taillights are also suspicious.
Don't give the other driver cash or payment. Crash for cash scammers want a quick, easy payday, so they might try to convince you to give them money up front. Don't let them scare you into giving them any money, and always go through your car insurance if you suspect potential fraud.