Be aware: The most common types of insurance fraud

Insurance Fraud

According to industry figures, a fraudulent insurance claim is uncovered every five minutes in the UK. This accounts to 107,000 fraudulent insurance claims worth £1.2 billion uncovered by insurers in 2019. This is a lot of crime taking place, and here at Budget Insurance we want our customers to feel protected when it comes to their insurance. That’s why we’re here to explain exactly what insurance fraud is, how it can happen and how you could be affected.

What is insurance fraud?

Insurance fraud is defined as an act that is committed with the aim to obtain a fraudulent outcome through an insurance process. There are various different types of fraudulent activity and they come in the form of the following:

Crash for Cash

This is where someone chooses to deliberately cause a road traffic collision for the purpose of financial gain. Fraudsters often plan and stage accidents hoping to make profit by making insurance claims. Unfortunately, many innocent road users can get caught up in these scams, being involved in accidents often ending up with no car to use or walking away with injury.

Types of car insurance fraud

Staged accident – This is where two people will intentionally crash into each other, usually out of sight, maybe on a quiet road or on a driveway. People may also look to purposely smash up a car using tools like a hammer and make out they have had an accident.

Induced accident – In an induced accident, the fraudster will target an innocent motorist to become the ‘At fault’ driver. The criminal will pull in front of their victim and hit the brakes, causing the driver behind to go into the back of the car. Car brake lights may be removed to give the innocent driver no hope of stopping in time. This is an extremely dangerous act causing risk to their own lives and those of innocent drivers.

Ghost accident – The third type of accident doesn’t actually involve any cars! Ghost accidents involve making claims for accidents which never happened and sometimes the cars mentioned didn’t ever exist.

Fraudsters may try to make money though the following:

  • Personal injury
  • Loss of earnings
  • Vehicle recovery
  • Car hire
  • Vehicle storage
  • Bogus passenger claims
  • Vehicle damage

How to identify a ‘Crash for Cash’

There are a few signs to spot which may indicate if you have been involved in a ‘Crash for Cash’ scam. Does the other driver look calm considering they’ve just been involved in an accident? Do they already have their insurance details written down, ready to pass over? And finally do their injuries seem over-exaggerated, considering the speed you were travelling at and the force of impact?

What to do if you think you’ve been involved in a scam

Take down as much information as you can, include where the crash happened, what time it occurred and what happened. Make a note of details for the other driver including their name, address and car details.

Take photos of the accident if it’s safe to do so. Take pictures of the damage to both cars, the placement of the vehicles and other evidence you think maybe useful.

If you’re suspicious of the accident, call the police and report it to them.

Ghost Brokers

Ghost Broking is a type of fraud that doesn’t involve an accident. This is where Fraudsters sell cheap motor insurance and issue false policies.

How is this done?

Usually scammers will purchase a legitimate insurance policy through a company using fake information. Scammers will re-design the documents to look like they have been issued from a legit company and sold to customers.

What are the consequences?

If you were to purchase a fraudulent insurance policy, it is pretty much the same as having no insurance at all. Driving without insurance could cause the following to happen:

  • The police may seize your car
  • You may receive a fixed penalty
  • You will be asked to purchase a real insurance policy and a fine may be charged to get your car back from the compound.
  • If you were to have an accident you may be liable for damage caused while driving without insurance

Types of home insurance fraud

Not only does insurance fraud occur for motor policies but home insurance too. Here’s some examples of home insurance cases.

Intentional damage – Believe it or not, not all house fires and damage are accidental, and people have been caught out damaging their own home to reap reward through an insurance pay out.

Overstating the value – A typical type of fraud that may take place under home insurance is where someone intentionally submits a false or misleading claim to receive compensation. Some people may say that the items stolen from their home are worth more than what they are.

Faking theft – Not only can damage be staged but cases of fraudulent theft cases can occur. This is where homeowners decide to fake a theft and will make a claim for items through their insurance.

How to avoid getting caught out by fraudulent insurance companies

How legitimate are the company?

When you look to buy your insurance always look for a known brand or ensure you are purchasing from a legitimate source such as a comparison site. Or if you prefer to go direct to an insurance company, ensure the broker is legitimate by checking if they are regulated by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA). These are both regulatory bodies that regulate financial services in the UK.

When you’re looking to purchase your insurance online, you should consider the following:

Does the insurance company have contact details should you need to speak to them?

Not all insurance providers will have a contact centre, but they should provide alternative contact details such as an email address or an online chat option. Check on their website for the contact details and if you can’t find any, it’s probably not worth taking the risk, especially if you ever needed to claim!

Does it seem too good to be true?

You may have received a competitive price from an insurance provider but sometimes it may be fraudulent, or the insurance provider may not be providing sufficient cover and offering a low price in exchange. If you’re at the renewal period of your insurance, it may be worth comparing the cover on your old documents to what’s being offered by the new insurance provider.

Who investigates insurance fraud?

The Insurance Fraud Bureau (IFB) is a non-profit company who look to share insurance fraud data and intelligence. Their objectives are to help insurance providers identify fraud and support police, regulators and law enforcement agencies in finding fraudsters.

What should I do if I suspect insurance fraud?

If you need to report insurance fraud or something suspicious that you’re unsure of, it’s best to speak to your insurance provider. It’s important that they are aware of anything that may have an impact on your insurance.

Here’s what to look out for:

Letters/Emails – Naturally with any insurance company, you are likely to receive documentation in some format, however if you receive a letter or email that doesn’t look right, or the information is incorrect, contact your insurance provider. They will be able to confirm whether they sent the communication to you.

Fraudulent calls – It is unlikely for your insurance provider to call you unless you have a claim going through or you have requested a call back. If you receive a call from someone who say they’re your insurance provider, there are a few things to ask to ensure they are who they say they are. Ask them to provide you with details that only your insurance provider should know, so rather than asking them for your address or car type, ask them for your policy number, details of the claim or how much your monthly/annual payments are.

What we do for our customers

We have been providing customers with their insurance for over 20 years, so you can put your trust in us. We have a dedicated team that ensure insurance fraud is detected and dealt with. If you have any concerns about your insurance policy or something that you’ve received in the post of by email, please give us a call. You can reach our customer services team on the following telephone numbers:

Car Insurance: 0344 412 2118

Van Insurance: 0344 412 2124

Home Insurance: 0344 412 2123

Life Insurance: 0330 018 8806

Alternatively if you would like to access your documents or check details about your policy, you can access them here on your My Account does.

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We’re currently experiencing a high volume of calls into our contact centre and whilst we are doing our very best to maintain service levels, we ask that you only call our contact centre if absolutely necessary so we can keep our phone lines available  for vulnerable customers and those who don’t have access to online services.

If you need to check any details or make a change to your policy, please  log in to your Self-Service Centre. It will be much quicker for you to make changes to your policy online at the moment. Once logged in, you can also use our Webchat service which is available Monday- Saturday 8am-6pm and Sunday 10am-4pm to make changes, accept or decline your renewal or if you need to let us know about a claim. To log in, please click here.

We also have some other information that may be useful. Click here to read our FAQ’s, and information on what we are doing to support key workers can be found here.