We're all paying more than we should for car insurance, and fraud is to blame

Claim fraud and buildup increased payments for auto injuries by $5.6 billion to $7.7 billion in the U.S. in 2012, and that's not chump change.

The Insurance Research Council (IRC) has released a study, Fraud and Buildup in Auto Injury Claims, which highlights the impact of fraud on auto injury claims. The study estimates that claim fraud and buildup increased payments for auto injuries by $5.6 billion to $7.7 billion in the U.S. in 2012, representing between 13% to 17% of total payments for five private passenger auto injury coverages.

According to file reviewers, 21% of bodily injury claims (BI) and 18% of personal injury protection (PIP) claims closed showed some type of fraud, usually claim buildup, which involves inflating the costs of otherwise legitimate claims. These types of fraud may involve chiropractic services, physical therapy, alternative medicine and even the use of pain management clinics.