According to the National Insurance Crime Bureau (NICB), insurance fraud is the second-most costly form of white-collar crime in America, costing billions of dollars annually. Understanding and spotting the most common types of car insurance fraud is your first line of defense. Here are seven prevalent schemes to watch out for.
Common Car Insurance Scams
Updated: September 8, 2026
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Car Insurance Scams: Key Takeaways
Fraudulent agents, staged crashes and fake injury claims are among the most common car insurance scams drivers face.
If you suspect a car insurance scam has taken place, document everything, contact your insurer and report it to your state insurance regulator.
Protect yourself against car insurance scammers with verified agents, written estimates and a dashcam to prevent inflated repair or towing costs.
Most Common Car Insurance Scams
1. Staged Accidents
Staged accident scammers strike when drivers are distracted. Knowing how these scams work helps you spot red flags before they cost you money.
Swoop and SquatMultiple vehicles work together in this scam to stage a rear-end collision. First, a car known as the squat car pulls in front of the victim's vehicle. Then a second car, the swoop car, cuts sharply in front of the squat car. The squat car brakes hard, and the victim crashes into it from behind.
A third car sometimes boxes in the victim so they cannot change lanes to avoid the crash. The crash looks like a standard rear-end collision, so investigators often blame the victim unless evidence shows the swoop car caused it.
Drive-down or false waveIn a drive-down scam, a fraudster waves a driver to turn or merge, then accelerates into a collision and claims the victim appeared out of nowhere. One version is the left-turn drive-down: the scammer waves a driver through an intersection, then blocks them mid-turn. Another car then crashes into the victim.
A right-turn version has the scammer rear-end the victim during the turn, then blame poor visibility or timing. The scammer often flees the scene. The victim is left responsible for the damage.
Wide Turn SideswipeAt intersections with poorly marked turn lanes, a scammer waits in the outer lane. The victim takes the inner lane to turn, and as both vehicles turn, the scammer sideswipes the victim's car on purpose. The scammer then claims the victim veered into their lane. The unclear lane markings make the blame shift easy to sell.
Panic stop or “stuffed car”A group of scammers crams into one car, then slams the brakes in front of a victim who is often distracted while driving. The rear-end crash lets passengers claim fake or exaggerated injuries for an insurance payout. Rear-end collisions default the blame to the victim. The NICB reports that some fraudsters injure themselves before the crash to make the injury claims look real.
Red flags:
- Coordinated drivers
- Cars with multiple passengers
- Anyone pushing for quick cash settlements
HOW TO AVOID THIS CAR INSURANCE SCAM
- Purchase a Front and Back Dashcam: Dashcams record staged accidents and give you proof against false claims.
- Keep Your Distance: Space between your car and the vehicle ahead cuts your risk of rear-end scams.
- Be Cautious of Hand Gestures: Other drivers may wave you through to set up a scam. Ignore the signal and turn or merge only when it's safe.
Staged Accidents Scams: The Cost on Car Insurance
Staged accidents push your car insurance from $1,623 to $2,363 per year, a 45% increase, according to MoneyGeek's analysis. Insurers treat this as a chargeable incident even when you're not at fault.
Staged accident claims take longer to resolve than standard claims because insurers investigate them for fraud. You'll need police reports, witness statements and sometimes surveillance footage to support your case.
| State Minimum | $791 | $1,154 |
| Full Coverage | $1,623 | $2,363 |
2. Car Insurance Agent and Ghost Broker Fraud
The vast majority of insurance representatives operate legitimately, but a small number sell fake policies or tack on unauthorized fees without telling you. Here's what broker fraud looks like:
Fake PoliciesA fake agent pockets the premium and never files the paperwork with the insurance company. Nothing reveals the gap in coverage until an insurer denies a claim or flags the registration, by which point there was never any insurance to begin with.
Premium SkimmingPart of the premium payment disappears into the agent's pocket in a premium skimming scam, with only a portion actually reaching the insurer. Coverage shrinks as a result, or the policy gets canceled outright.
Unauthorized Policy ChangesSome agents alter policies without permission: raising a deductible here, dropping a coverage there, whatever trims the premium on paper. The result is less coverage than what was originally purchased.
Fake Discounts or Add-onsClosing the sale sometimes means a fraudulent agent invents discounts or coverage add-ons that never existed. The gap stays invisible until an insurer denies a claim for something that was supposedly covered.
Duplicate or Ghost PoliciesThis scam takes two forms. Scammers issue more than one policy for the same vehicle, or write a "ghost" policy that looks legitimate but was never valid. Either form can leave a driver with no coverage at all, or a mess to untangle right when a claim needs to go through.
HOW TO AVOID THIS CAR INSURANCE SCAM
- Verify the agent's license: Before signing anything, check the agent's license status with the state's department of insurance.
- Request direct policy confirmation: Policy documents should come straight from the insurer, not only through the agent.
- Avoid suspicious payment methods: Checks and cards go directly to the insurer. Cash to an individual is a hard no, and a receipt should follow every payment.
- Do your research: Compare quotes with three or more providers before any commitment.
- Be wary of unrealistic offers: An unusually low rate, or an offer light on details, is worth a direct call to the insurer before moving forward.
3. Third-Party Fake Injury Claims
It starts small: a parking-lot tap, barely a mark, nobody hurt at the scene. Then, days later, a claim shows up, major neck or back injuries according to the other driver.
Distracted or hurried drivers make the easiest targets for this scheme, mostly because they rarely leave the scene with thorough documentation in hand.
Red flags:
- Injury claims filed the same day as the crash
- Attorneys reaching out before the incident's even reported to the insurer
- Medical records that contradict each other or skip key details
HOW TO AVOID THIS CAR INSURANCE SCAM
- Take photos at the scene: Every vehicle, all visible damage and the surrounding area deserve a photo, even when the incident looks minor.
- Call the police: A police report should get filed for every accident, full stop. Nothing defends against a made-up claim like an official record on file.
- Stick to the facts: At the scene, stick to what's known for certain, nothing more. Admitting fault or downplaying what happened is off the table, no matter how minor it looks.
4. Fraudulent Car Repair Scams
Post-accident urgency is exactly what dishonest repair shops prey on. Inflated labor charges, substandard parts and billing for phantom work are their go-to tactics. So drivers are left with unsafe repairs and bills they never saw coming.
Phantom RepairsThe shop bills for parts or services never actually performed. They anticipate that neither the driver nor the insurer checks closely. The problem stays hidden until the same issue resurfaces.
Low-Quality PartsCheap or used components go in where new or manufacturer-approved parts should be, and the bill still charges for top-tier replacements.
Unnecessary RepairsThe shop pads the bill with unnecessary work, dressed up as a safety or reliability concern to justify the extra charges.
Inflated Labor CostsMore labor hours get billed than the job actually requires, banking on the driver having no idea how long a repair should realistically take.
Holding Your Car HostageExtra payment gets demanded before the car is released, or the shop simply refuses to hand it back until the surprise charges get paid. Getting the vehicle back becomes the only reason left to pay.
HOW TO AVOID THIS CAR INSURANCE SCAM
- Use a trusted or insurer-approved shop: Certified shops or ones on the insurer's approved list are the safer bet, and a quick Better Business Bureau check before agreeing to any work adds another layer of safety.
- Get a written estimate first: A written breakdown of parts and labor costs should exist before any work begins.
- Check the repairs before you pay: Line by line, the finished work should match the invoice before any payment changes hands.
5. The Bad Samaritan
Here, someone shows up to give unsolicited help at a crash scene, and that person gets paid for the referral. Tow operators, repair shops or medical clinics that overcharge are where they steer drivers, splitting the inflated fees once the deal closes.
Tow Truck ScamsA scammer calls an unlicensed tow truck that takes your car to an unaffiliated or overpriced repair shop. You end up paying hidden fees or struggling to get your car back.
Stolen or Switched InfoWhile pretending to help, the scammer takes photos of your documents or vehicle information for identity theft. This leads to unauthorized insurance claims or financial fraud.
Fake Authority FiguresSome scammers pretend to be off-duty police officers, insurance reps or legal advisors to gain your trust. They use this false authority to pressure you into making bad decisions quickly.
HOW TO AVOID THIS CAR INSURANCE SCAM
- Call your insurer first: Right after an accident, a call to the insurer gets guidance on approved tow services and repair shops before accepting help from anyone at the scene.
- Be careful with strangers offering help: Anyone who approaches unasked deserves a firm no, especially if they're pushing to arrange a tow or repair shop.
- Confirm the tow service before agreeing: Tow trucks sent by the insurer or local authorities are the only acceptable option, and confirming the destination before towing begins is a must.
6. Digital & Phishing Insurance Scams
Fraudsters take notice the moment a claim gets filed. Texts, emails and calls start pretending to be the insurer, all angling to steal payment details or policy information.
Red Flags
- Links pointing to misspelled or off-brand websites
- Requests to pay by gift card or cryptocurrency
- Messages threatening same-day cancellation if you don't respond fast
- Caller ID numbers that don't match the one on your insurance card
What to Do
- Suspicious links get skipped entirely; the insurer's official app or website is the safer route in.
- Before acting on any payment or policy request, the number on the insurance card is the one to call for confirmation.
- Two-factor authentication belongs on every insurer online account.
If You Clicked
- A password change comes first, immediately, followed by a call to the insurer to lock the account down.
- The scam itself should get reported both to the state Department of Insurance and to the FBI's Internet Crime Complaint Center (IC3).
- Anything that feels off is a reason to stop and verify directly before taking another step.
7. Windshield & Tow/Repair Scams: Spotting Overcharges
Stress after an accident makes anyone a target, so watch for common schemes.
Common Plays
- Windshield pop-ups: "Free chip repair" gets advertised, then turns into a claim for a full replacement nobody needed.
- Unauthorized tows: An unapproved lot ends up with the car, held until unexpected storage or release fees get paid.
- Hostage bills: Inflated charges are the price of getting the vehicle back, with the shop refusing to release it otherwise.
How to Protect Yourself
Use insurer-approved or certified shops and get a written estimate covering parts and labor before any work starts. Take photos of the odometer, VIN and visible damage when you drop off and pick up your car. Approve any changes to the repair scope in writing.
Turn down the tows you didn't request. Ask who sent the truck and where your car is going. Report suspected scams to your state Department of Insurance or local law enforcement.
A few extra minutes checking the details can prevent inflated costs and save on repairs you didn't need.
What to Do If You're the Victim of a Car Insurance Scam
If you suspect you're the victim of an insurance scam or fraud, these are the steps you should take:
- 1Stay Calm and Document Everything
Take clear photos right away of all vehicles involved, the location, any damage, license plates and injuries. Get contact details from any witnesses and write down what happened while it's still fresh. Strong records give investigators more to work with.
- 2Call the Police
Report every incident to the police and ask for an official report, even for minor ones. A police report creates an impartial record that protects you from false claims. Give an honest, detailed statement without admitting fault.
- 3Notify Your Insurance Company
Contact your insurer right away to report the accident and your fraud concerns. Share everything you have: photos, witness statements and a copy of the police report. Telling your insurer early helps them spot suspicious activity and shut it down faster.
- 4File a Complaint With Authorities
Report the scam to your state's department of insurance and the National Insurance Crime Bureau (NICB). These organizations track fraud and may look into your case. Your report can protect other drivers from the same scheme.
- 5Avoid Direct Contact With the Scammer
Don't talk to the other driver after the incident, especially if you think fraud is involved. Let your insurer and law enforcement handle all communication. If someone pressures you to pay cash or skip the official process, that's a sign of fraud.
- 6Monitor Your Insurance and Credit
Review your insurance policy for any unexpected changes or rate increases. Pay close attention to your declarations page and any endorsements, and be wary of premium increases exceeding 10% without clear justification.
Check your credit report for unusual activity if the scam involved identity theft or false claims made in your name. Consider placing fraud alerts with the three major credit bureaus: Equifax, Experian, and TransUnion. An initial fraud alert typically lasts 90 days. Catching problems early limits the damage.
BUY A DASHCAM TO PROTECT YOURSELF FROM SCAMMERS
Purchasing a dash cam to document accidents can save you from falling victim to an insurance scammer. Depending on the type of dash cam, what features you want and how many you purchase, it can range from $50 to $260, based on Amazon prices. The highest-priced cameras have several lenses to capture footage from the front, back and inside of your vehicle and may have a night-vision feature.
Who Is Most at Risk of Car Insurance Scams?
Certain demographic groups are targeted more often for scams because criminals think certain people are easier to intimidate or may help them obtain more money. These higher-risk targets include women, seniors, drivers operating work vehicles or big rigs and luxury car drivers.
Being part of one or more of these groups doesn't mean you'll be victimized or that you're an easier target than anyone else. Staying vigilant and taking recommended actions to protect yourself keeps a scam attempt from succeeding.
Car Insurance Fraud: Bottom Line
Car insurance scams happen to anyone: staged crashes, fake policies and more. Stay alert, document everything and report suspicious activity to protect yourself and your finances. Use trusted agents, written repair estimates and dashcams for peace of mind. Simple habits can prevent expensive fraud.
Auto Insurance Scams: FAQ
Below are answers to the most frequently asked questions about common car insurance scams.
Report a car insurance scam to start an investigation. There are several places you can report the insurance fraud scheme:
- The fraud department of the car insurance company in question
- National Insurance Crime Bureau (NICB)
- Coalition Against Insurance Fraud (CAIF)
- National Association of Insurance Commissioners (NAIC)
- Your local FBI office
You won't always know you're a victim of car insurance fraud. Watch for these signs of a fraudulent claim:
- The person knows the accident process in unusual detail, including correct terminology and how car insurance policies work.
- A high number of claims filed in a short period.
- An accident that happens soon after a car purchase, registration, or after adding full coverage.
- Multiple injuries or extensive vehicle damage with no valid police report.
- An attorney letter of representation filed the same day as, or soon after, the accident.
Keep a safe distance on the road, document every accident, verify agents and repair shops and install a dashcam to capture real-time evidence. Always report suspicious activity to your insurer and local authorities.
Car insurance is a legitimate product. Fraud happens at the edges, where bad actors exploit claims processes, repair networks and policy distribution. Knowing the patterns limits your exposure.
Assume it’s fake if it asks for payment or personal details. Legitimate insurers don’t request sensitive data through texts or unsolicited calls. Don’t click links. Log in through your insurer’s app or website, or call the number on your ID card to confirm authenticity before responding.
Ghost brokers are fake or unlicensed agents selling invalid policies. Confirm licenses through your state Department of Insurance or NAIC lookup before paying. Cash-only requests, missing policy numbers or unrealistic discounts signal fraud.
Even if you weren't at fault, your premium can rise after a staged crash. Share photos, dashcam footage and the police report with your insurer. Ask for a fraud review so the claim is properly classified and doesn't increase your future car insurance costs.
You're not required to accept an unsolicited tow. Ask who sent the truck, where your car is going and request a written estimate before signing anything. If it seems suspicious, decline service and report the company to your insurer or state Department of Insurance.
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Resources on Car Insurance Fraud
There are many resources available to help with understanding and reporting car insurance scams and fraud. These anti-fraud agencies, programs and resources are available in your state and nationwide. Some of the links below will take you to state-specific resources you can use to learn more or report insurance fraud.
Local or State Resources
- State Attorneys General: As the “People’s Lawyer,” the attorney general for your state or territory can help you file a claim and provide additional resources.
- Highway Patrol or State Police Websites: Use this page to find the link for each state’s highway patrol or state police website to help you file a fraud claim.
- Insurance Regulators by State: Find the department of insurance for each state from this list, so you can locate resources to file a car insurance fraud claim.
- Map of National Association of Insurance Commissioners states and jurisdictions: Use this map of states and jurisdictions to look up your state's insurance commissioner to report a fraudulent insurance agent.
- American Automobile Association (AAA): The American Automobile Association (AAA) automatically directs you to the site for your region. If you are a AAA member, you can contact an agent about suspected scams.
National Resources
- Federal Bureau of Investigation (FBI): Suspicious activities, including financial crimes like car insurance fraud, can be reported to your local FBI office for investigation.
- National Insurance Crime Bureau: NICB provides valuable information on insurance crimes and video illustrations of how the most common stage accidents are performed. You can report fraud through this nonprofit organization's website.
- International Association of Auto Theft Investigators: The IAATI’s mission is to combine international resources to combat auto theft. This organization consists of professional auto theft investigators and law enforcement representatives.
- Anti-Fraud Alliance: The AFA represents law enforcement and the private industry to provide training, networking and collaboration among all levels to combat insurance fraud.
- Fraud.org: Created by the National Consumers League, this website provides tips for consumers to avoid being scammed and resources to use if you think you have been.
- Coalition Against Insurance Fraud: This organization collects information on insurance fraud, works to pass anti-fraud laws and educates the public on how to spot and report scam attempts.
- United States Department of Justice: You can find additional information about financial fraud crimes and what you will need to have if you pursue a lawsuit.
- Counsel Hound: Attorney-managed consultation service that connects people with lawyers to match their specific legal case.
Read More on Auto Insurance
About Mark Fitzpatrick
Mark Fitzpatrick is a licensed Property and Casualty (P&C) Insurance Producer in Connecticut and MoneyGeek's resident expert in insurance and economics. In nearly a decade covering the insurance market at LendingTree and MoneyGeek, he's analyzed hundreds of carriers and millions of rates across auto, home, renters, health and life insurance.
His work has appeared in The Washington Post, The New York Times and NPR. He draws on independent cost and consumer experience data, and no insurance company partnerships affect his recommendations.
Mark studied at Boston College and later earned a master's in economics and international relations from Johns Hopkins University. He worked in financial risk management at State Street before joining MoneyGeek. He's also a five-time “Jeopardy!” champion.
Sources
- National Insurance Crime Bureau. "Prevent Fraud & Theft." Accessed September 23, 2026.
- National Insurance Crime Bureau. "Staged Auto Accident Fraud." Accessed September 23, 2026.