What is insurance fraud?

Legally, ‘fraud’ is a form of theft based on deception – i.e. it involves lying (about anything) to gain something you wouldn’t otherwise be entitled to. Penalties range from a substantial fine to a 10-year prison term, and you can probably forget about insuring anything ever again, so it’s a risk not worth taking. Apart from the legal consequences, insurance fraud also pushes up premiums as insurers attempt to recover their costs.

The most common form of insurance fraud is called Opportunistic Fraud and involves the exaggeration of loss or damage when making a claim, or lying about the circumstances in which the damage occurred. Examples we’ve seen include:

–        “It was damaged in the storm. I guess it’s a write off.”

This car was bludgeoned with a golf ball in a sock to imitate hail damage.

–        “He backed into my car so I’m making a claim on his insurance.”

This uninsured car had about $5000 worth of damage and arrived at the workshop with scraps of kangaroo fur still attached. The third-party car, which was allegedly at fault, had a two-inch scratch on the rear bumper.

These were clearly deliberate attempts to make fraudulent claims, and neither succeeded. But by far the most frequent fraud attempt we see is this:

–        “Somebody must have hit me in the car park. I didn’t see it happen.”

This car usually shows telltale signs of impact with a pole, brick wall or letterbox.

The worst thing about this is that it’s completely unnecessary. The beauty of insuring your car is that you’re covered for accidental damage, even if you’re the only car involved.

So it’s worth remembering a few facts about how smash repairers and insurance companies work before you’re tempted to lie to them:

1. It’s perfectly okay to claim for an accidental impact, however silly the incident seems to you.
2. You can’t claim for malicious or intentionally caused damage.
3. Insurers know we’re human. Claiming for a ‘didn’t see the pole’ incident has the same affect on your policy as claiming for a ‘hit whilst parked’ incident – so it’s easier just to tell the truth!
4. Insurance companies have excellent systems in place to prevent insurance fraud, and they’ve seen every variety hundreds of times.
5. Honesty is important to your smash repairer too. We need to know what really happened so we can fix the damage properly.

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