Let us discuss one of the simplest form of car insurance fraud.
In this type of fraud, this is a conspiracy between the car repair shop and the car owner.
The car owner meets an accident. He bumped a wall resulting in damage to the front bumper and perhaps the fender.
The car owner then brings it to the car repair shop.
Some unscrupulous car repair shops will intentionally cause more damage to some parts of the car.
For example, instead of just the bumper and the fender being damaged, the car repair shop will intentionally damage the headlights. The car owner will not object to this, thinking that this is to his advantage because he will get a new set of headlights, charge to the insurance company.
So, when a claim is made to the insurance company, it will not be just the bumper and fenders claimed for indemnification, but also the headlights which was not actually destroyed as a result of the accident.
Remember that car insurance, like any insurance is only an indemnification resulting from a peril.
Insurance is there to restore the insured to the same condition prior to the peril.
Insurance is not a scheme to enrich the insured.
Insurance companies have their own meticulous and highly experienced in-house adjusters and evaluators.
These claims evaluators can easily smell an anomaly, when there is one.
The claims evaluators will closely re-trace the point of impact and can determine which parts are affected for a particular impact.
They know which damaged parts are not accident-related, therefore not compensable.
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