Car Insurance Fraud

Essay by EssaySwap ContributorCollege, Undergraduate February 2008

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Car Insurance Fraud Are people paying too much for their car insurance? Kentucky's insurance rates are higher in Kentucky as opposed to other places and still rising due to so many people committing insurance fraud. The ways that Kentucky's population commits insurance fraud are plentiful and creative. One type of insurance fraud is purchasing car insurance and after receiving the proof of insurance canceling the policy. Another type of fraud involves staging accidents so that a person can sue the insurance company, and finally terrorizing their own vehicle to collect insurance money, just to name a few.

One type of insurance fraud that occurs frequently is people purchase car insurance and then cancels the policy so they can get a proof of insurance. Caywood offers this opinion, "They shop the market and find where they can make the least down payment because they have no intention of making another payment"(1).

Therefore, the honest people must pay higher rates to make up the difference. The honest people pay higher rates for membership fees and monthly bills to make up for the money lost due to fraud. Since fewer people in the state insure their cars, we are likely to pick up the tab for those people when they are involved in auto accidents.

People are likely to do almost anything when trying to get an insurance company to pick up the tab. An insurance adjuster at Kentucky Farm Bureau said "People stage accidents several different ways, such as waiting at an intersection and hitting an unsuspecting person in the side while having witnesses waiting to swear the other person ran a red-light or stop sign. Others get in front of someone, wait until they follow along too close, and then stop quickly causing the person behind them to rear end them".

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