Los Angeles named auto insurance fraud capital of California

Los Angeles has been dubbed "auto fraud capital of California," according to David Jones, commissioner of the California Department of Insurance. In 2012 alone, state officials investigated more than 7,700 car insurance fraud claims in Los Angeles County alone. That figure accounts for more than 40 percent of all auto fraud claims made in the entire state of California that year.

Auto insurance fraud, which occurs when scammers stage accidents or cause intentional collisions in order to collect insurance funds, cost insurers a total of about $143 million last year. Those costs, however, are ultimately passed on to other insurance policyholders in the form of higher premiums - Los Angeles residents pay an average of $200 to $300 more per year for car insurance as a result of fraud, NBC News reported.

Cracking down on auto insurance fraud in LA

In September 2013, the Los Angeles District Attorney's Office received a grant worth $6.9 million from the Department of Insurance for the purpose of helping to crack down on auto insurance fraud.

According to Los Angeles prosecutors, insurance fraud crime rings typically involve three different types of participants:

  • Doctors and other professionals who provide false documentation of injuries and help to file phony claims.
  • Middlemen known as "cappers" who procure vehicles to be crashed and recruit bogus "victims."
  • "Victims" who are paid (typically $50 to $100) to be present in a vehicle when it crashes and pretend to be injured.

After a staged crash occurs, the phony victims typically file falsified medical claims for their so-called injuries in order to collect insurance payments.

Insurance fraud red flags

At a recent press conference, Los Angeles law enforcement officials and insurance representatives urged people to drive defensively and be on the lookout for potential warning signs of insurance fraud.

Because insurance scammers often operate by stopping suddenly in order to trigger a rear-end collision with the vehicle behind them, officials say it is especially important for drivers to leave plenty of room between their own vehicles and the cars ahead. If traffic is flowing freely and a vehicle stops abruptly for no apparent reason, it may indicate that the driver is trying to cause a collision.

Other potential warning signs of car insurance fraud include:

  • The other vehicle in a crash is full of passengers.
  • The other driver has newly issued insurance.
  • The other car has a salvage title or is in poor condition.
  • Witnesses suddenly appear to confirm the other driver's story, often almost word for word.

Wrongful denial of insurance claims

Unfortunately, in addition to higher insurance costs, Los Angeles drivers also pay the price for insurance fraud in other ways. Because insurance companies are on high alert for potential fraud, people who have suffered injuries or property damage in legitimate traffic accidents may sometimes be wrongly suspected of participating in a scam. As a result, some legitimate claimants may be wrongfully denied the insurance benefits to which they are entitled.

If you have been denied payment on a car insurance claim, an experienced insurance lawyer may be able to help you receive the payments you deserve. Contact a knowledgeable insurance attorney in your area for more information about your rights and legal options.