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Fraudulent insurance agents, fake injury claims and staged accidents are some of the most common car insurance scams.
If you fall victim to a car insurance scam, alert your insurance company, document everything and report the scam to the National Association of Insurance Commissioners.
The most at-risk demographic groups for car insurance scams are women, seniors, drivers operating work vehicles and luxury car drivers.
The National Insurance Crime Bureau (NICB) reports that insurance fraud is the second-most costly form of white-collar crime in America, costing billions of dollars annually. Educating yourself about how insurance scams work can make it hard for a criminal to target you.
In this scam, multiple vehicles work together to stage a rear-end collision. One car, called the "squat" car, pulls in front of the victim’s vehicle and suddenly slows down. At the same time, a second car, known as the "swoop" car, cuts sharply in front of the squat car, forcing it to brake abruptly. This causes the victim to crash into the squat car from behind.
A third car may box the victim in, preventing them from switching lanes to escape. Since it appears the victim rear-ended the squat car, they’re often blamed unless clear evidence proves the swoop car’s role.
In a drive down scam, a fraudster waves a driver to turn or merge, then speeds up to cause a collision and falsely claims the victim appeared out of nowhere. Variations include the left turn drive down, where the scammer waves a driver through an intersection, then blocks them mid-turn, causing another car to crash into the victim.
In a right turn version, the scammer rear-ends the victim during the turn and blames poor visibility or timing. The scammer may flee the scene, leaving the victim responsible for the damages.
At intersections with poorly marked turn lanes, a scammer stays in the outer lane while the victim uses the inner lane to turn. As both vehicles turn, the scammer intentionally sideswipes the victim’s car. They then claim the victim veered into their lane, using the unclear markings to shift the blame.
A group of scammers packs into one car and suddenly slams on the brakes in front of a victim, often when the victim is distracted while driving. After the rear-end crash, the passengers claim fake or exaggerated injuries to collect insurance money. Because it’s a rear-end collision, the victim is usually blamed. According to the NICB, some fraudsters even injure themselves beforehand to make their claims more convincing.
Falling victim to a staged accident can raise your car insurance from $1,623 per year to $2,363 per year, according to MoneyGeek's analysis, with premiums increasing by 45% after an accident. Even if you're not truly at fault, insurers may still treat it as a chargeable incident. That means you're paying more yearly because of a scam.
| State Minimum | $791 | $1,154 |
| Full Coverage | $1,623 | $2,363 |
While most insurance agents act in good faith, some take advantage of their position to scam customers for personal gain. These dishonest practices can leave drivers with fake policies, unpaid claims or unexpected charges, often without realizing it until it’s too late.
An agent may collect your premium but never submit the paperwork to the insurance company, leaving you unknowingly uninsured. You may only find out after a claim is denied or your registration is flagged.
In this scam, the agent pockets part of your premium payment and sends only a portion to the insurer. This can result in reduced coverage or policy cancellation without your knowledge.
Some agents alter your policy without permission, such as increasing deductibles or removing coverages, to make your premium appear cheaper. In reality, you end up with less financial protection than expected.
A fraudulent agent might promise special discounts or coverage add-ons that don’t exist to close a sale. You’ll only discover the truth when your claim is denied for something you thought was covered.
Scammers may issue more than one policy for the same vehicle or issue a “ghost” policy that looks real but is not valid. This can lead to confusion during a claim or no coverage at all.
You're pulling out of a parking space, trying to finish errands quickly, when a minor fender bender happens. At first, it seems like no big deal, until days later, the other driver claims whiplash or another injury. Scammers often target parents or busy drivers, assuming they’ll be too distracted or eager to settle quickly to question the claim.
After an accident, getting your car repaired quickly and safely is a top priority, but some dishonest repair shops take advantage of that urgency. These scammers may overcharge, use substandard parts or bill your insurer for work they never performed. Falling for one of these scams can leave you with unsafe repairs and out-of-pocket costs.
The shop charges for parts or services that were never done, hoping you or your insurer won’t check. You may not realize it until the same issue resurfaces.
Instead of using new or manufacturer-approved parts, scammers install cheap or used components while billing for top-tier replacements. This can compromise your vehicle’s safety and performance.
Some shops inflate the repair bill by including work your car doesn’t need. They may claim it’s for safety or long-term reliability to justify the extra charges.
Fraudulent repair shops may charge for more labor hours than the job realistically takes. They count on customers not knowing how long repairs should actually take.
A dishonest shop might demand extra payment or refuse to release your car until you agree to surprise charges. This puts pressure on you to pay up just to get your vehicle back.
After a crash, you may be shaken and unsure of what to do, all of which are perfect conditions for a scammer posing as a helpful stranger. These "Good Samaritans" often appear out of nowhere, offering unsolicited help, only to steer you toward overpriced or shady services. Their goal is to profit off your confusion, not actually assist you.
A scammer may call an unlicensed tow truck that takes your car to an unaffiliated or overpriced repair shop. You may end up paying hidden fees or struggling to get your car back.
While pretending to help, the scammer might take photos of your documents or vehicle information for identity theft. This can lead to unauthorized insurance claims or financial fraud.
Some 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.
Realizing you’ve been scammed can be frustrating and even overwhelming, especially when you’re dealing with insurance claims, injuries or vehicle repairs. But taking quick, clear steps can help you protect yourself, dispute false claims and prevent further damage. Here’s what to do if you think you’ve been targeted by a car insurance scam:
Immediately after the incident, take clear photos of all vehicles involved, the location, damage, license plates and any injuries. Collect contact details for witnesses and jot down your own memory of what happened while it’s still fresh. The more detailed your records, the stronger your case will be if the scam is investigated.
Even if the damage seems minor, always report the incident to the police and request an official report. A police report provides an impartial record that can help protect you from false claims. Be honest and detailed in your statement without admitting fault.
Contact your insurer as soon as possible to report the accident and your concerns about possible fraud. Share all documentation, including photos, witness statements and a copy of the police report. Early notification helps your insurer flag suspicious activity and take preventive measures.
Don’t engage in back-and-forth conversations with the other party after the incident, especially if you suspect fraudulent behavior. Let your insurance company and law enforcement handle communication to avoid making statements that could be misused. If the other driver pressures you for cash or tries to bypass official processes, that's a red flag.
Report the scam to your state’s department of insurance and the National Insurance Crime Bureau (NICB). These organizations track fraudulent activity and may open an investigation based on your claim. Your report could help prevent others from falling victim to the same scheme.
Keep an eye on your insurance policy for unexpected changes or increases in premiums. If the scam involved identity theft or false claims in your name, also check your credit report for unusual activity. Quick detection can help you take corrective action before the damage spreads.
It may be a good investment to purchase a dash cam to help document accidents. 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.
Certain demographic groups may be targeted more often for scams because criminals think certain people are easier to intimidate. Scammers and con artists also target people who 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 necessarily mean you'll be victimized or that you are an easier target than anyone else. Staying vigilant and taking recommended actions to protect yourself can keep a scam attempt from succeeding.
With car insurance scams, some common questions that come up. Here are the answers to some of the most common questions asked about car insurance frauds.
The broad definition of car insurance fraud is any fraud committed against a car insurance company. Consumers or agents of the insurance company can engage in scams. Money lost to scams is then passed onto the consumer in higher premiums, up to an average additional $700 per year.
If you are worried about your premiums, it may be a good idea to reevaluate your current plan and look at other car insurance companies. Compare their auto quotes and decide which one has the most affordable coverage.
If you are aware of a car insurance scam, it’s best to report it and have an investigation started. There are several places you can report the insurance fraud scheme:
Sometimes, you might not know you’re a victim of car insurance fraud. Here are some signs you may see that can point towards a fraudulent claim scam:
You might not think a little white lie hurts anyone, but if you’re caught, it could have serious implications. Insurance fraud costs billions of dollars each year, and you could face:
It’s not worth the risk of getting caught and charged if you commit soft insurance fraud by lying on the application or overstating your car claim.
Common scams include staged accidents, fake injury claims, tow truck fraud, premium skimming by agents and phantom car repairs. These schemes are designed to exploit insurance systems and raise your premiums.
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.
A staged car accident scam involves fraudsters intentionally causing a crash to file false insurance claims. These often involve multiple drivers coordinating a setup that makes the victim appear at fault.
Unfortunately, yes. If you rear-end a car or make a left turn into a trap, insurers may initially consider you at fault unless there's strong evidence of fraud.
Car insurance itself is not a scam, but the industry can be exploited by bad actors committing fraud. With the right coverage and vigilance, insurance protects you from major financial loss after an accident.
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.
About Mandy Sleight
Mandy Sleight is a writer for MoneyGeek and has been an insurance agent since 2005. As a freelance writer, she uses her vast knowledge of the insurance industry to create informative, engaging and easy-to-understand content for consumers. Her work has been featured in Market Watch, Kiplinger and other major publications.
Jessica Sillers writes about finance, business, travel and parenting for various businesses and publications. She lives with her family in the greater Washington, D.C. area. Learn more about her work at www.dcfreelancewriter.com.
