What is Car Insurance Fraud and the 5 Types?
Reading time: 5 mins
Motor insurance fraud is on the rise in Singapore as seen in the news and social media postings. According to the General Insurance Association of Singapore (GIA), about $140 million had been wasted in 2016 paying and investigating fraudulent and inflated claims. This amount has likely increased causing car insurance premiums to rise yearly, which inadvertently affects all drivers.
The thing is, although all drivers have car insurance, many do not understand the underlying clauses that insurers put into the policy. This allows fraudsters to take advantage and use it to make illegal profit through trickery.
However, fighting fraud is not as easy as it seems especially if you do not recognize that you are being scammed. Some cases of car insurance fraud may be difficult to spot and you could be committing them without realizing it. We‘ve gone through all you need to know about car insurance fraud in Singapore before, but in this article we’ve highlighted:
- What is car insurance fraud?
- 5 common types of car insurance fraud and road scams – how you can look out for them & what to do if you find yourself in any of these scenarios
What is Car Insurance Fraud?
Car insurance fraud is the act of making a fraudulent insurance claim in return for monetary gains. It involves filing false or exaggerated claims involving vehicle damage or personal injuries following an accident.
5 Types of Car Insurance Scams
Here’s a list of car insurance fraud and road scams, and what to do if you fall prey to the situation:
1. Tow Truck Scams
This is one of the most common motor insurance scams. As soon as this happens, a waiting tow truck will suddenly appear to assist you. They would offer their towing services at a high price and pressure you to use their towing service. It can seem to be godsent especially if you are stranded on the expressway at an odd hour or if your car is obstructing the road. They would then tow your car to their own workshop instead of the trusted workshop approved by your insurer. Sometimes they would even force you to pay more before releasing your car.
If you ever get caught in this situation, do not panic. Firmly and politely reject their offer to help and let them know that you have informed the towing service under your car insurance company. Of course this depends if you have opted for 24-hour breakdown assistance as part of your insurance policy.
2. Staged or Fake Accidents
Another way these scammers operate is by setting up fake car accidents so they can file a fraudulent personal injury claim.
In this scenario, the scammer will suddenly appear behind your car as you are reversing, causing you to backup into them unknowingly. In this instance, they will immediately blame you for any damage caused and pressure you to pay for the repairs through your insurance policy.
It may seem like an unforgiving situation, but if you feel something amiss, keep your cool and avoid discussing details of your car insurance policy with the other driver. The best thing to do is to inform the other driver that you are happy to head to the nearest police station after discussing the details of the accident with your insurer.
Take down all the details of the other driver and car involved in the accident. If you get objections, then it is a clear sign of fraudulent behaviour. In this case, take down the other car’s number plate and make a police report immediately.
3. Emergency Brake Scams
Emergency break scammers would taunt you by slamming on their brakes abruptly until you hit them. The scammers do this to extort money for repairs and personal injury costs.
In most cases, whoever hits a vehicle from the back is always at fault. However, never admit fault or decide liability with the other driver. While you may feel overwhelmed, the subsequent investigation carried out by your claims specialist may prove otherwise. Sometimes the damages can be so minor that it can be easily settled between the driver, without anyone having to submit a claim or lose their No Claims Discount (NCD). But if the other driver demands for a ridiculous sum as compensation or insists that you put in a claim with your insurer, then it may be best to lodge a police report and let the court decide.
Also, there may be witnesses whose testimonials can be used as evidence if they have noticed something fishy too. So, make sure you’ve obtained their particulars and contact numbers.
Besides that, if you ever notice the vehicle in front of you slamming on the brakes with no apparent reason, slow down and maintain a safe distance. If the scammer continues to harass you on the road, drive to the nearest police station or stop at a safe place as soon as you can. Do not engage in their road bullying tactics and do not try to speed up because this could put you in more danger.
4. Overstating the Claim Amount
Overstating or exaggerating an insurance claim is a crime. Although you may see this as an opportunity to claim a hefty sum for damage costs that were not caused by the accident, dishonest policyholders will face severe punishment.
Did you know that in order to tackle the rising concerns of false or overinflated car insurance claims, the General Insurance Association (GIA) has launched a GIA Insurance Fraud Tip-off (GIFT) reward scheme to garner information and supporting evidence from the members of the public against fraudsters? The GIFT reward scheme is an online reporting platform that rewards individuals with up to $10,000 for reporting and providing evidence of insurance fraud.
5. Falsely Making Claim Under Your Name
If your car was involved in an accident while it was being driven by someone else who is not registered as a named driver under Drivers & Usage in your insurance policy, you will not be eligible to make any claims.
Therefore, it could be tempting to list your name as the driver involved in the accident when submitting your car insurance claim. But, if you’re caught falsifying this major detail, your policy will not only be cancelled but legal actions can be taken against you for filing fraudulent claims.
So, always be truthful when submitting a car insurance claim and disclose all information accurately. Also, ensure that you include all frequent drivers of your vehicle in your insurance policy to avoid this dilemma in the first place.
Stay Vigilant and Beware of Car Insurance Scammers
It’s easy to feel helpless when you meet with a car accident and any help is usually comforting. However, take note of these 5 common scams and be aware of car insurance fraudsters that appear to be angels in disguise.
Know exactly what to do if you are at-fault in a car accident, and make sure you have a preferred workshop already in mind. If you are unsure of these specifics, or if you’re suspicious of the situation but not sure what to do, call your car insurance company’s hotline and seek advice from a claims specialist.
Don’t be too willing to accept help, even from the most well-meaning of people. If you can’t call your insurance company’s towing service on time, the Expressway Monitoring and Advisory System, better known as EMAS, is committed to dispatching a service crew to arrive within 15 minutes of the incident. So, never allow a random stranger to tow your car.
But you should definitely consider getting a car insurance policy that includes towing services and get an in-car camera to ensure you have evidence leading up to the incident. Drive safe, be vigilant and ensure you have good car insurance for added peace of mind!