In recent times, vehicle insurance scams particularly the ones related to cars have become rampant in India. The sad part, however, is that most of the people including vehicle owners are still unaware of all the malpractices carried out by these fraudsters.
Since car insurance involves larger monetary value than two-wheeler insurance, fraudulent activities are more prevalent in the former. Hence, in this article we’ll keep focus on car insurance scams. Let us find out what exactly is car insurance scam and types of insurance frauds involving cars in the Indian market.
What is a car insurance scam?
Any kind of fraudulent activity involving vehicle insurance can be defined as car insurance fraud. Insurance fraud can be committed either by fraudulent insurance companies or fraudulent agents/middlemen working in the industry or even by policy holders in some cases.
Types of vehicle insurance scams
While some insurance frauds can be defined as false claims, some frauds are classified as false policies. In both cases, innocent people fall prey to fraud insurance providers and fraud insurance agents. Most of the insurance frauds are committed during purchase of policy by fraudulent companies and middle men, while other scams are a result of false claims made by policy holders.
- Fraud against policy holders
Most of the frauds against policy holders or policy buyers are a result of people buying fake insurance policies. There are many fake insurance companies out there who react out to and lure potential and innocent clients into buying an insurance policy which does not exist.
Then there are middle men who cheat clients into buying a cheap insurance policy which does not offer the desired coverage wanted by the customer. The buyer attracted by the less quoted premium does not release the limited scope of coverage offered to them which ends up hurting them in the case of eventuality.
- Fraud against insurance company
Such frauds are committed by policy holders against the insurance company and involve high levels of schemes. Practices such as exaggerating the damage incurred to increase the claim to make up for the deductible. Such practices are commonly referred to as padding and the added damage makes it difficult to verify the legitimacy of the claims made by insurance holders.
Insurance holders even go to the extent of staging false accidents. These staged accidents are pre-planned with innocent victims being involved. Such victims include truck drivers, or bikers who are accused of being in the accident so that a claim can be made. Another prime example of a fraud against an insurance company when the car owner reports theft if his car when it is really hidden in a forest or in some shady place.
Consequences of car insurance scams
Consequences of these scams can be multi fold. Firstly all customers have to deal with increased insurance premiums due to increasing claims settlement resulting out of these activities. Secondly, all repair work done on the vehicle is listed and can be verified online on the insurance company’s portal with the chassis number. This will result in a significantly lower resale value of the vehicle.
