Are You At Risk of Suffering a Staged Accident? Here’s How to Tell

Are You At Risk of Suffering a Staged Accident? Here’s How to Tell

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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. You've just fallen victim to a fraudulent scenario that has plagued insurance companies for years.


While insurance fraud can take many forms, staged accidents have proven especially lucrative for fraudsters in recent years.

For example, one scam ring in Florida defrauded insurance companies out of more than $23 million between 2010 and 2017. The criminals will 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 can be dangerous for all drivers on the road.

Further, the ultimate losses due to fraud may be factored into the average cost of insurance across all policyholders, so honest drivers end up footing the bill over the long term. From 2011 to 2015, property and casualty insurance companies lost an average of $34 billion per year due to insurance fraud. This average comes from the Insurance Information Institute (III), which estimates that fraud constitutes approximately 10% of the annual losses and loss-adjustment expenses experienced by these insurers.

There’s no sure way to predict when accident fraud might occur, and it's not always easy to tell if you've just fallen victim to a staged accident. Here are some common clues that may indicate you've been involved in attempted fraud.

Do you live in a no-fault state?

While staged accidents occur all across the nation, most incidents take place in states with no-fault laws, such as Florida or Michigan, according to Frank Scafidi, director of public affairs at the National Insurance Crime Bureau (NICB). Scafidi says that is because no-fault laws require insurance providers 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, those can also make quick settlements easier to obtain by criminals.

Were you prevented from changing lanes?

The most innocuous 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, in order 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. In addition to the obvious danger this poses to everyone involved, such a claim would likely incur a rate increase of up to 33% from your insurance provider, according to our analysts.

To make matters worse, perpetrators will often coordinate with unscrupulous medical practitioners to exaggerate their medical claims and lawyers to sue insurance companies who question them. "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," Scafidi said. "These places provide the 'cover' for the fraudulent billing and provision of medical treatments."

For example, crime rings composed of lawyers, medical practitioners and street-level criminals in New York are suspected to have cost consumers and insurers approximately $229 million in 2009, according to III. These losses have been dubbed a "fraud tax," which is paid by all drivers to cover the fraudulent claims.

Were you driving in a wealthy neighborhood?

Staged accidents occur more frequently in urban, wealthy neighborhoods where there is an increased likelihood of collisions and drivers are more likely to have better-than-average insurance policies, according to the NICB. Perpetrators have also been known to target elderly or female drivers, whom they hope will be easier to intimidate into accepting responsibility for an accident.

How to protect yourself

Consider getting a dashcam. These small video cameras attach to your vehicle's dashboard and are relatively inexpensive. They can record what occurs immediately before you are involved in an accident or other driving-related incident.

Document and identify. In lieu of a dashcam, use your phone to immediately photograph all damage done to the alleged fraudster's car, as well as everyone who was in their vehicle, and record their contact information. Doing this might dissuade them from attempting to make any fraudulent claims against you, and will limit their ability to exaggerate 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 in order to obtain an official report.

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.

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