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Insurance injury fraud: Your questions answered

Have you been injured in an accident? If you have then you’re in luck, because insurance law in the UK entitles you to claim personal injury compensation. However this readily available cash pot has led to fraudsters deliberately involving themselves in car accidents in the hope of a big insurance payout.

It’s now a multi-million pound industry that benefits fraudulent claimants and their lawyers, while costing innocent motorists nearly £400 million per year in increased premiums. In this article, we’ll attempt to analyse the extent of the problem, figure out how many people are at it, why they do it, how they do it and what can be done to put an end to this ugly fraud.

An increasing number of people are feigning injury to claim insurance cash.
An increasing number of people are feigning injury to claim insurance cash.

How does the scam work?

If you’re injured in an accident, either psychologically or physically, you’re entitled to claim personal injury compensation. If you can prove your injury, or more accurately, if nobody can disprove your injury, you stand a good chance of netting compensation. 

Who is behind these scams?

Ordinary people responding to personal injury lawyer adverts play their part, but this is just the tip of the iceberg. There are also highly organised individuals that will go to any lengths to cash in. Often, these groups will recruit motorists, who have been involved in legitimate crashes, to exaggerate their injuries. Others will ‘borrow’ a motorist’s car in exchange for cash, get involved in an accident, then ask that motorist to claim on their insurance for yet more cash.

There are also groups of companies that operate as part of injury cash scam networks. This network includes car hire firms, layers, motor repair specialists, doctors, claims companies and, of course, the claimants who pretend to be injured. Basically, anyone corrupt enough to lie about an accident injury might be part of a crash for cash network.

How do scammers fake accidents and injuries?

In most collisions, where one vehicle hits another, the driver of the car behind is deemed at fault. Crash for cash scammers therefore tend to cause accidents where they can exploit this. Typically, they adopt one of three methods.

1. A staged accident.
Two cars, both driven by scammers, will deliberately crash into each other away from the public eye. Typically, they’ll drive into one another, but they’ve also been known to take a sledgehammer to the vehicles to mimic the effects of a crash.

2. An induced accident
Induced accidents involve a fraudster pulling in front of an unsuspecting victim, slamming on the brakes and causing a collision. Occasionally, they’ll disable their brake lights to give the victim less opportunity to stop in time. These ‘accidents’ can involve multiple fraudsters, who will use decoy vehicles that give them a ‘reason’ for slamming on their brakes, and even fake witnesses that lie about what they see and who is to blame.

3. Ghost accidents
Sometimes, fraudsters won’t bother going through the hassle of crashing into cars – they’ll simply invent a crash. Contrived, or ‘ghost’ accidents are paper-based frauds, which involve submitting fabricated claims for accidents that never happened, often for cars that don’t even exist.

Wait a second. Isn’t this dangerous?

You betcha. According to the Insurance Fraud Bureau, crash for cash scams have caused fatalities in America. Nobody has died as a result of an induced accident in the UK, but it’s surely only a matter of time.

How much money is earned from personal injury claims?

The amount claimants receive varies depending on the nature of the accident and injury, but the short answer is: quite a bit. Claimants can receive cash for personal injury, loss of earnings, vehicle recovery, car hire, vehicle storage, vehicle damage and their passengers can claim, too.

According to some injury lawyers, a minor hand injury will pay out between £600 – £3,000. Minor neck injuries net between £800 and £5,000, while leg fractures pay roughly £18,000. Most fraudsters tend to avoid faking these injuries, however, since they’re easy to diagnose – if your leg’s not broken, most doctors (who aren’t part of a scam network) will usually find out. Instead, most opt to claim on fake back injuries, since persistent back pain is often difficult to diagnose. It pays well, too. Moderate back injury can net you £185,000, while severe back injury could result in payouts of up to £265,000.

OK, but all that money comes from corporations, right?

Yeah, but guess where these corporations earn their money. That’s right – from ordinary folks like you. If they’re busy paying out £400m every year in fraudulent claims, they’re going to try to make up that shortfall the only way they know how – by raising your insurance premium.

What are the insurance companies doing about this?

Raising your premiums, mostly, but they’re also fighting back. They’ve decided the only way to deal with this growing problem is for all insurance companies to work together. To that end, they’ve funded a non-profit organisation known as the Insurance Fraud Bureau, which is focussed on detecting and preventing organised and cross-industry insurance fraud.

Is anyone else working to combat this?

There are some companies that believe technology could come to our aid. Cobra, best known for its car alarm systems, has developed a telematics system that works in a similar manner to aircraft black boxes. This records crash data onto a hard drive that can be accessed by insurance companies, who can build a clearer picture of the circumstances of any accident. Everything, from the location and speed of a car, to the steering angle and the amount of braking force applied, can be recorded onto the black box.

Is there anything I can do to help?

1 in 10 people would consider taking part in crash for cash schemes for financial gain, so the chances are you probably know someone who’s either involved in it, or would consider getting involved. If you want to help, you can contact the IFB’s Cheatline to report fraudsters. Their number is 0800 422 0421. Yeah, you might lose a friend, but your premium might drop. 

How can I protect myself against crash for cash fraudsters?

The easiest, most effective step you can take is to be vigilant when driving. Tailgating others leaves you at risk of being involved in a deliberately engineered crash. You can you can also install an in-car CCTV system, such as the Exeros Cube 2 Car camera, which can monitor the road ahead as you drive, recording any scrapes you may get into.

You can even turn your mobile phone into an accident-monitoring CCTV system. The iCar app records your journey and can provide a visual record if you were actually at fault in an accident.

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