One of the biggest fraud problems in America is auto insurance fraud. Unfortunately many people are staging auto accidents to collect on the insurance money. You could find yourself in the middle of a large problem if someone in another vehicle purposefully hits your car in order to collect on the insurance money. Here are the common auto insurance fraud scams to watch out for:

• Car accidents
• Owner give-ups
• 30-day specials
• Export fraud
• Phantom vehicles

If you find yourself the victim of auto insurance fraud, you do have legal rights. Most auto insurance protects you if you are the victim and will provide you with a legal defense. In order to determine if you are a victim of auto insurance fraud, you need to understand the common auto insurance fraud scams in detail.

Beginning with car accidents, there are 3 main types of car accident scams. First there is the swoop and squat. The swoop and squat will involve 3 cars, usually 2 that are driven by the criminals and the last one is driven by an unknowing victim. The "squat" vehicle driver will position themselves in front of the victim. Then the person who is driving the "swoop" vehicle will intentionally pull ahead of the squat vehicle and cut them off, causing the driver to slam on his brakes and stop short. The unknowing victim usually cannot react quick enough and rear ends the squat vehicle. The swoop vehicle drives off and no one knows who really caused the accident. The victim will tell the police about the swoop vehicle, but of course this car is nowhere to be found and the victim will end up paying for all the damages and any personal injury claims.

The second type of car accident scam is known as the side swipe. Most of these accidents will occur at a busy intersection with dual left hand turn lanes. The criminal will intentionally position their car in the outer left turn lane. The unknowing victim will get in the other turn lane and the criminal will intentionally "drift" their car into yours, making it look like you drove into their lane.

The last type of car accident scam in known as the "panic stop". The panic stop typically involves numerous passengers in a late model car. The criminal will position their car in front of the victim. The passengers in the criminal's car will watch the victim for any signs of distraction, such as talking on a cell phone, looking down to change the radio, etc. Once they notice you are distracted, they signal the criminal to slam on his brakes. The unknowing victim will not have enough reaction time and will slam into the car. When the victim will explain to the police that the criminal simply slammed on their brakes for no reason, their complaint will not go too far and the victim will be forced to pay for all the damages and injuries that are reported. As with any driving behavior, the only way to avoid being in an auto accident scam is to be observant and keep a good distance from the vehicle in front of you.

Owner give-ups are another common auto insurance fraud scheme. The owner of the vehicle will lie about the theft of their vehicle by burning it, submerging it, or abandoning it. If the police are unable to locate the vehicle, the owner will be able to collect on the insurance money.

30-Day specials are another auto insurance fraud scheme. If a care is in need of extensive repair, the owner of the vehicle will hide the car for 30 days, enough time for the insurance company to settle the claim. Then, once the claim has been paid, the vehicle is often found abandoned somewhere.

Export Fraud is a quick and easy way for criminals to make money. They will secure a loan for a new vehicle and obtain an insurance policy for the new car. Then, they will report the vehicle stolen to the police. The criminal will actually ship the car overseas illegally and sell it on the black market. They will collect the insurance money on the car, and receive money for selling it illegally.

The last form of auto insurance fraud is called "phantom vehicles." The criminal will create a phony title or registration to secure insurance on a fake car. Of course they can report this vehicle stolen and collect on the insurance money.

The National Insurance Crime Bureau is working hard to crack down on theses criminals, but they are still out there. Due to criminals like this, the insurance rates can increase for everyone else. Because of these crimes, auto insurance companies have tightened their insurance screening process. Several auto insurance companies will now check your credit report as well as your driving record and criminal history before they will consider insuring you.

Many auto makers are also taking steps to decrease the likelihood of auto insurance fraud. Vehicle Identification Numbers (VIN) have helped to reduce the number of stolen cars sold on the black market. Modern laser cut keys have helped to reduce the number of luxury vehicles stolen and auto security systems are protecting the average car as well. While many criminals are able to disconnect security alarm systems, it may give you enough time to get back to your car before the thief can drive away in it.

A reduction in insurance fraud would benefit not only the insurance company, but the policy holders as well. The insurance industry experts state that "fraud accounts for 10% of claims - something like $100 billion." Insurance companies themselves claim they spend at least $650 million annually just in fraud detection, not to mention the losses. If the insurance companies can find a method to eliminate insurance fraud, the rates will be reduced for policyholders. Fighting insurance fraud is expensive and labor intensive; this is why several auto insurance companies are asking their existing policy holders to petition congress for stricter penalties for insurance fraud.
Several states have taken steps toward reducing insurance fraud. Recently Florida made it a second-degree felony to stage a car accident in order to collect on the insurance money or to make a personal injury claim. The maximum sentence (if convicted) is 15 years. Other states are offering rewards to anyone who has information about auto insurance fraud criminals or underground organizations.

The database company, LexisNexis is now marketing a new program called "Rate Evasion Evaluation". This service will generate a risk score to insurance companies about their clients based on insurance applications, personal information, and vehicle registrations.

If you have become a victim of insurance fraud, you will not only have to pay for all the damages of the accident, you may face legal charges as well. Your premiums will increase with your auto insurance provider and it make take a long time before they are reduced. There are steps you can take to avoid becoming a victim of auto insurance fraud.

First, be prepared at all times. Because you know the difference between each of the common auto insurance fraud scams, you know what to watch out for. Being aware of your surroundings is one of the first steps to protecting yourself. Watch for drivers who are following you, or watching your driving habits.

Second, don't follow the car in front of you too closely. This is hard to do for many people, especially if they are in a rush to get somewhere. It is important to keep at least 3 seconds back from the car in front of you. This leaves you with plenty of room to stop if the car in front of you tries to pull a panic stop.

Third, when you are turning with a double left or right turn signal, do not allow your car to veer out of its lane. Watch the car next to you, and allow them a little room if you notice they begin to veer.

Fourth, if you are involved in an auto accident, be sure to record everything. Take pictures of the scene and inform the police officer of everything that happened at the time you were involved in the accident.

Fifth, when you report your claim to your insurance company, be sure to inform them if something seemed suspicious. Many criminals are experienced and if you report a panic stop, the insurance company may be able to check their records and pull up a driving history report on the other party. If they notice this is not the first accident they have been involved in, they can inform the police who will launch an investigation.

Overall, just use your common sense when you are driving. If you must talk on your cell phone, pull over. Being distracted is one of the main causes for auto accidents and knowing that criminals are watching your behavior may just give you a second thought at picking up that cell phone in the car.