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Glossary of Vehicle Insurance Fraud / Crime Terms
ACT Committee: Anti-Car Theft Committee. Committees established by insurance
industry and law enforcement in a number of states, to deter auto theft and
vehicle insurance fraud.
Agent: A person or business that is empowered to act on behalf of others.
Anti-Fraud Bureaus: Government operated agencies dedicated to detecting,
investigating and deterring insurance fraud. Fraud bureaus and insurance company
Special Investigative Units, or SIU's, work closely with law enforcement and
organizations such as the National Insurance Crime Bureau --NICB --, which
employ valuable analysis and forecasting techniques for the detection and
prevention of insurance fraud.
Application Fraud: This type of fraud can occur when a vehicle owner mis-states
information important to obtaining a policy. For example, using the address of a
friend or relative that is closer to their place of work in order to obtain a
lower insurance premium, or railing to include young drivers on the application.
Arranged Arson: The owner of a vehicle, or a second party engaged by the owner,
sets fire to a vehicle in order for the owner to collect on an insurance claim.
ATPA: Auto Theft Prevention Authority. Organizations enacted by legislation in a
number of states that are funded by motorists. They provide the financial
support for law enforcement and other organizations to develop and run programs
aimed at preventing auto theft and vehicle insurance fraud.
Auto Auction: Vehicles are sold - in working order, non-operational salvage, or
metal scrap - accompanied by the vehicle's title and Vehicle Identification
Number --VIN --.
Auto Recycler: Recyclers may sell vehicles that an insurance company has
designated as "totaled", many of which are rebuilt and resold, while some are
dismantled for their parts.
Backdate: To falsely add a date to a document that is earlier than the correct
date for the purpose of deceiving an insurance company.
Bonded Title: The title of a vehicle is bonded during the titling process when
the owner has not yet received proof of ownership. In this case "bonding" refers
to a surety, or protection, against financial loss.
Born Again Vehicle: A stolen or renumbered vehicle that, through the use of a
forged duplicate title, a counterfeit title, a manufacturer's source document
showing the Vehicle Identification Number --VIN --, or the original title that's
been returned to the U.S. from an illegally exported vehicle, assumes the
identity of a vehicle that's been exported.
Claim Exaggeration: Overstating an insurance claim or falsely reporting items
stolen from vehicle to make up for the policy's deductible. Also known as Claim
Padding, this type of fraud amounts to millions of dollars each year.
Cloned Registration: A stolen vehicle that bears a "replacement" tag obtained by
using bone-fide registration information obtained without the vehicle owner's
knowledge.
Cloned VIN's: Found on stolen and renumbered vehicles equipped with a
counterfeit VIN that can be found on a legitimate vehicle of the same make and
model. Through the use of a forged duplicate title application, with a
"transfer" or Registration Only --RO -- transaction, the vehicle becomes
legitimized.
Collusion: Pertaining to insurance fraud, this is the act of two or more parties
acting together to defraud an insurance company.
Counterfeiting: In the context of vehicle insurance fraud, this refers to
forging, altering, copying documents without a legal right to do so for the
purpose of deceiving an insurance carrier.
Dismantled Title: When one or more of a vehicle's primary systems is damaged to
the point that the cost to repair or replace the components exceeds the
vehicle's fair market value, a "dismantled" title can be issued, thereby
allowing it to be used only for parts or scrap, but not to be driven.
Dummy: An imitation or representation of the original.
Dumped Vehicle: A vehicle that is intentionally disposed of, such as "dumping"
it in a river, lake or swamp and later claiming it stolen. Dumping is often
resorted to when the owner can't make car loan payments and/or is facing a
sizeable over-mileage penalty with a leased vehicle. --See Staged Vehicle Theft
--.
Duplicate Vehicle Frauds: Schemes to defraud an insurer using documentation
--VIN and title -- from a vehicle of the same year and model. --See Cloned
Vehicles --.
Duplicate Title Fraud:
EPA Label: Designation commonly used for the Federal Motor Vehicle Safety
Standard Certification Label, which is located on the driver's side door post or
door jamb. The label includes the VIN number and other important information
about the vehicle.
Export Fraud: An insured vehicle, which has been purchased or leased, generally
with a minimum down payment, is illegally shipped overseas to be sold. It is
then reported stolen and the criminals - most likely an organized crime ring -
reap large profits from insurance settlements.
Falsified Theft Reports: The owner of a vehicle submits a false claim for items
reported stolen from a vehicle but, in fact, were not stolen, or exaggerates a
claim for items that were actually stolen.
Faked Accidents: An event created to intentionally cause damage to a vehicle.
For example, a vehicle intentionally stops unexpectedly to cause a rear-end
collision with the car behind it. The perpetrator will benefit from the accident
through false medical and/or property damage claims.
Federal Motor Vehicle Theft Law Enforcement Act: Enforcement Act of 1984, which
went into effect with the 1987 model year. The Act requires the use of
standardized National Highway Traffic Safety Administration --NHTSA -- labels on
specified new vehicles and replacement parts. These labels provide valuable
information for investigative use.
Fraud: Deceit or trickery for gain. In the context of vehicle insurance fraud, a
theft of illicit scheme perpetrated for profit by defrauding an insurance
carrier.
Gray Market Vehicles: Vehicles that do not conform to North American Government
safety and emission standards, and whose value is less than similar models
produced for sale in North America. Vehicles of this type are frequently
involved in fraudulent theft claims.
Hard Fraud: An intentional act committed for the purpose of collecting money
from an insurance company.
Hidden Repair Fraud: Also known as "Inflated Repair Estimates". Working in
collusion with the owner of a vehicle, an auto body shop inflates the extent of
the damage to cover the deductible. Independent damage appraisals help to
eliminate this type of fraud.
Hit and Run: Owner of a vehicle with existing damage reports a "Hit and Run"
incident in which the vehicle was damaged.
Insurance Fraud: The act of deceiving an insurance company for profit.
Junk Title: A title issued for a damaged vehicle deemed not be road-worthy,
where the cost of repairing the vehicle is in excess of its fair market value,
or a title issued for a vehicle declared to be a "Total Loss" by an insurance
carrier in another state.
Mileage Fraud: Misrepresenting the true mileage of a vehicle by resetting the
odometer to a lower setting. --See Odometer Rollback --.
NHTSA Labels: NHTSA --National Highway Traffic Safety Administration -- labels,
located on different parts of a motor vehicle, identify major component parts
and replacement parts on vehicles designated as "high theft rate vehicles."
Salvage and replacement parts are also included under the labeling requirement.
Non-Conforming VIN: A fictitious Vehicle Identification Number that appears to
be authentic because of an accompanying counterfeit title.
Non-Manifested Vehicles: Vehicles discovered in cargo containers being shipped
out of the country that do not appear on a shipping manifest. Such illegal
shipments are part of the Export Fraud dilemma.
Odometer Rollback: Resetting the odometer to show less mileage than the true
odometer reading.
Owner Give-Up: The intentional abandonment or destruction of an owned or leased
vehicle, which is then reported stolen to collect from an insurance carrier.
Owner give-ups are motivated by a variety of reasons including: owner needs
cash, mechanical problems requiring expensive repairs, problems in making car
loan, lease or insurance premium payments.
Paper Accidents: To cover the cost to repair existing damage, vehicle owner
contrives a fictitious accident and files an insurance claim.
Paper Cars: Vehicles that exist only on paper, supported by counterfeit titles
and other falsified documents.
Perpetrator: Individual who commits a crime.
Phantom Vehicles: Also known as "Paper Cars", "phantoms" are, in effect,
vehicles that exist only on paper for the sole purpose of defrauding an
insurance company. After an insurance policy is obtained, using phony
information as to the vehicle's existence and identification, a dishonest policy
owner, or in many cases an organized crime ring, will report the vehicle stolen
and file a theft claim with the carrier; to obtain the largest settlement
possible, the identities of high-end, high cost, vehicles are used. In states
with mandatory pre-insurance inspection laws, this scam has been eliminated.
Phony Thefts: Also known as "Owner Give-ups", the policy owner either abandons
an insured vehicle or arranges to have it stolen, for the purpose of collecting
on an insurance claim.
Policy Misrepresentation: To obtain a lower premium based on the distance
traveled between the insured's home and place of work, the vehicle owner uses
the address of a relative or friend, which is closer to the owner's place of
work.
Policy Six-Pack Scam: See Multiple Policy Fraud.
Pre-Insurance Inspection: The process of having vehicles physically inspected by
trained inspectors, at designated inspection sites - and in many cases
photographed - as a requisite for obtaining an insurance policy. This effective
fraud deterrent is now mandated in a number of states.
Photos: A series of three --or more -- photographs or digital images of a
vehicle that a) proves that the vehicle exists, b) records its condition, and c)
shows the EPA label, which includes the VIN.
Premium Fraud: A term associated with policy owners who provide erroneous or
misleading information when applying for insurance coverage, to influence
premium cost.
Premium Retrieval: Submitting a false or inflated claim to an insurance carrier
as a way to recover some of the money that has been paid for insurance coverage
in the past. Some policy owners feel that since they have a good driving record
and have made no claims for a number of years, they "are entitled to get some of
their money back." Strange as it seems, some otherwise honest people do not
consider this as cheating.
Pre-Existing Damage: Physical damage that existed prior to the issuance of a
motor vehicle insurance policy.
Property Crime: As defined in the FBI's Uniform Crime Reports, 22 October 2001,
"Property crime includes the offenses of burglary, larceny-theft, motor vehicle
theft, and arson."
Rebuilt Title: This term is associated with a "Salvage Vehicle" that has been
restored to operating condition, most likely with refurbished parts. In most
states, vehicles of this type must be inspected before it is allowed to be used.
Red Flag: An indicator of possible fraud.
Reported Crime: Vehicle crime, such as theft, that is reported to a law
enforcement agency. In some cases the crime reported, such as vehicle theft,
never happened, but was simply the first step in submitting a fraudulent claim
to an insurance company.
Ruse: A deception; a scheme attempting to make something appear to be other than
what it is.
Salvage Fraud: Attempt to collect on a fraudulent insurance claim based on a
vehicle that has previously been declared a "total loss."
Salvage Vehicle: Vehicle with sufficient damage produced by collision, fire or
vandalism, to be declared to be a total loss by an insurance carrier.
Salvage Switch: A stolen and renumbered vehicle bearing the Vehicle
Identification Number --VIN -- of a previously salvaged --total loss -- vehicle
for which a title was issued based on the title of the salvaged vehicle.
Scam: As related to vehicle insurance fraud, a fraudulent scheme devised to
defraud an insurance company.
Scapegoat Theft: Person claiming that their vehicle was stolen to avoid the
consequences for another offense. As an example, a vehicle which has collided
with and damaged another vehicle may leave the vehicle and declare it stolen in
order not to be responsible for the damage.
SIU: Abbreviation for an insurance company Special Investigative Unit which is
responsible for investigating fraudulent claims and other vehicle-related
crimes.
Soft Fraud: A term frequently used to describe subtle mis-statements and
erroneous information provided to insurance carriers. Also referred to as
"fudging", soft fraud can be a crime.
Staged Auto Theft: For a variety of reasons, such as being behind in car loan
payments, in need of case, or over the mileage allowance on a leased vehicle,
policy owner arranges to have vehicle stolen, or disposes of it.
Staged Accidents: One or more parties collude to cause an intentional accident
to collect on bodily injury or property damage insurance.
Swoop and Squat: A planned accident in which a vehicle --vehicle 1 - the "swoop"
car -- cuts in front of a second member of the scam team --vehicle 2 - the
"squat" car -- who jams on the brakes, causing the innocent driver behind
--vehicle 3 -- to hit Vehicle 2. The vehicle that was hit --the "squat" car --
will submit a claim for property damage, and in many cases, bodily injury claims
for the vehicle's occupants.
Theft Report Falsification: Vehicle owner falsifies the value of items taken in
a reported burglary to collect from an insurance company. In some cases no
burglary occurred, in others a burglary took place but the claim was
exaggerated.
Thirty-Day Special: A vehicle in need of extensive repairs is reported stolen
and kept hidden for the 30-days needed to process and collect on an insurance
claim to be processed and paid --time may exceed 30 days --. Some time after the
claim is paid the original owner dumps the car, which may ultimately be found.
During this time the perpetrator of the scam obtains a new vehicle; the original
vehicle, if found, becomes the property of the insurance company.
VIN: Abbreviation for Vehicle Identification Number, a 17-digit number which is,
in essence, a vehicle's birth certificate. The
VIN identifies the physical characteristics of each vehicle, including
information about the manufacturer, year, model, body type, engine, and serial
number.
Washed Title: Title based on materially false or fictitious information,
eliminating any previous problems/issues related to the vehicle.
Other factors affecting insurance territory rates include time and efficiency of police response and law enforcement, local road and traffic conditions and the quality of local medical services. Insurers even factor in the litigation rates in a given area, how many lawsuits are filed, go to trial, are settled out of court, and for how much money.
What Steps can I take to control my NJ Car Insurance Rates
NJ Insurers often discount their rates in order to encourage good driving practices and the use of safety and security precautions. Depending on the insurance company, you can often lower your rates from 5 to 55 percent. Sometimes the investment you make in your vehicle is worth the discount, and sometimes it's simply worth some peace of mind. For example, the purchase of anti-lock brakes merits a discount from nearly every insurer, but the discount probably will not pay for the brakes which cost several hundred dollars during the normal life of your vehicle. Anti-lock brakes are touted, nonetheless, as a life-saving feature and deserves serious consideration when safety is a top priority..
Safety Features Anti-lock brakes, air bags and passive restraint systems i.e., automatic seat belts.
Defensive Driving Clean violation record, driver's education courses for teenagers and defensive driving or accident prevention courses for adults insurance discounts for the latter are required in some states.
Security Systems Alarms, electronic locks, VIN etching and automotive disabling devices.
Changing The Driving Habits Try commuting by public transit, using a company vehicle for work-related travel and car-pooling.
Formal Agreements Not to Drink and Drive The availability of a discount for signing such an agreement varies among insurers, however is a powerful idea that works.
Buying NJ Home Owners and NJ Auto Policies from the Same Company. If you own a home and an automobile and you are insured by two different companies, check into the cost of carrying both policies by one insurer. Your NJ insurance agent or producer can give you guidance as to which insurers offer discounts. This will always offer your the best buy, so put it in your corner when shopping for rates
You may also lower your insurance rates by requesting higher deductibles, which is the amount of money you pay out of pocket before you make a claim. Increasing your deductibles on collision and comprehensive coverage from $500 to $750, or even $1,000, will bring your rates down. Moreover, you may not need collision and comprehensive coverage if you drive an older car. Ask your agent or direct writing customer service professional which discounts are available to you.
The more people you allow to drive your vehicle on a regular basis, the greater the chances of your vehicle being in an accident. Teenagers are especially expensive to insure because they are the least experienced drivers. A driver's-ed course can help ease the burden of insurance costs since it teaches your teenager defensive driving techniques. If your child's high school does not offer drivers education, try to find one offered by another school or a private firm in the area. After all, the cost of driver's-ed could be cheaper than the extra cost of your insurance. Many insurers offer "good student" discounts as well. An adult's driving experience can also affect your rates significantly. Don't assume that every adult you know has been driving since age 16 or 17 or is a competent driver with a clean driving or insurance record. Again, taking a defensive driving course is a good way for adults to prove they are also responsible drivers, thus lowering their risk and their insurance premium rates. Hopefully armed with this informaton you will be able to get your best buy on NJ Car Insurance.