What are the Different Types of Motor Vehicle Insurance Fraud?

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  • Written By: Autumn Rivers
  • Edited By: Andrew Jones
  • Last Modified Date: 14 October 2019
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Some people attempt to get money from insurance companies by committing fraud. There are various types of motor vehicle insurance fraud, with one of the most common kinds being staged car accidents. Some car owners also either commit arson or sell their car into the black market in another country, and then report it as stolen. Another kind of fraud deals with medical issues, as some people involved in an accident may either make up injuries or pretend they are worse than they are. All of these categories of fraud are dangerous, illegal, and usually end up increasing the cost of car insurance for everyone.

The most basic type of motor vehicle insurance fraud usually involves a staged car accident in which the car is usually totaled or badly damaged. In some cases, the driver cuts off an innocent driver on the road and slams on the brakes so that he is rear ended, often resulting in the innocent driver being cited as at-fault. This is usually called the panic stop since it requires the other driver to slam on his brakes. Some people who commit this kind of motor vehicle insurance fraud target drivers who are already distracted while behind the wheel, usually due to either changing the radio station or talking on the phone, so that the accident really does look like their fault.


Another kind of staged accident is called the swoop and squat, and involves two drivers. The person referred to as the squat picks an innocent driver to get in front of on the road. The second person involved in the scheme, called the swoop, then cuts off the squat's car. This causes the squat to slam on the brakes so that the innocent driver rear ends him. They then pretend to not know each other during the accident investigation so that it looks realistic, and then they split the money that the innocent driver's insurance company usually pays out.

A car owner who does not want to stage an accident may prefer to set the car on fire, instead. The owner then reports it stolen so that he is compensated for it. Other car owners may commit export fraud, in which they take the car to another country and sell it on the black market there. Since it is unlikely to be found by authorities, they can report it stolen.

One kind of motor vehicle insurance fraud has to do with injuries received in a car accident. This type of scheme involves a driver exaggerating the severity of injuries, or even completely making them up. This may allow the driver to receive compensation for medical issues, even if they do not visit the doctor. This type of motor vehicle insurance fraud may occur either after a legitimate accident or one that was committed fraudulently.



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