Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jul 19, 2021

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Simple fender benders are a tried and true way that fraudsters use to bilk insurance companies.
Simple fender benders are a tried and true way that fraudsters use to bilk insurance companies. (image via blogspot.com)

While the situation in New York hasn’t gotten to the point of the mass insurance fraud that takes place in Florida, which leads the nation in all types of car insurance fraud, there are new calls from prosecutors and legislators alike to address what is described as a growing epidemic of questionable claims throughout New York.

According to the Insurance Research Council, more than a third of all no-fault insurance claims made in the New York City area look to have elements of fraud involved. That means they have inflated medical costs, or some other issue that raises suspicion of the validity of the crash. A full 14 percent of the claims involved over-billing or excessive medical costs. These incidents are so common they’re overwhelming New York City.

“Those who engage in insurance fraud are actually hitting all of us in our pocketbook,” said Queens District Attorney Richard Brown.

And Brown is correct. The costs associated with insurance fraud don’t simply harm insurance companies, but they’re also passed on to policyholders with higher premiums across the board. In Florida, it is estimated that fraud adds nearly $90.00 to every premium.

In general, the schemes involve staged car crashes, and then claims are made under no-fault Personal Injury Protection (PIP) coverage. PIP provides up to $10,000 in medical costs for every individual involved in an accident. Healthcare providers such as clinics and individual physicians are involved. They provide no medical treatment, but charge the insurance companies and pay off the driver and passengers who perpetrate the staged crash. Law enforcement officials indicate that most who take part in these fraudulent claims have ties to organized crime.

“Staged auto accidents are a dangerous criminal activity that targets innocent drivers with increasingly bold schemes aimed at defrauding insurance companies,” says Loretta Worters, vice president of the Insurance Information Institute, which is located in New York City. “Not only do honest policyholders ultimately end up paying more for auto insurance, but those committing the fraud can cause serious injuries or death.”

Staged accidents don’t just cause problems for insurance companies – they can also lead to aggravation for drivers who are victims of them as well. Beyond inconveniences such as dealing with their wrecked automobile, potential injuries and other issues these staged wrecks cause, they can impact a victim’s insurance rates as well. Higher rates and even policy cancellations are common outcomes.