As consumers and insurers become more sophisticated in their efforts to stop insurance fraud, those determined to defraud the system create new methods of doing so. The National Insurance Crime Bureau and Farmers Insurance recently warned the public of two new scams involving vehicles.
One innovative theft scheme, called cloning, entails the copying of vehicle identification numbers from legally owned and documented vehicles sitting in parking lots or dealerships, according to the NICB. The VIN is used to create counterfeit VIN tags. A similar vehicle is stolen and its VIN tag is replaced with the counterfeit one, making it a clone of the original vehicle.
To complete the scenario, criminals create counterfeit ownership documents for the cloned vehicles or obtain ownership documentation under false pretenses. The phony documentation is used to sell the stolen vehicles to innocent purchasers. With the counterfeit tag, the stolen vehicle can be sold without detection by government agencies.
Vehicle cloning is highly lucrative, notes the NICB. Car thieves often travel across state and international borders to sell such vehicles at high prices. Most licensing agencies do not check for duplicate ownership when out-of-state ownership documents are surrendered, so the odds of discovery are low. It also is easy to insure the same VIN simultaneously in different locations.
Farmers is alerting vehicle owners of windshield replacement scams. Because driving with cracked or broken windshields puts drivers and their passengers at risk, insurers in some states are required by law to waive the deductibles for damaged or broken windshields in an effort to encourage vehicle owners to make repairs. Unscrupulous glass companies are using that loophole to convince consumers that they can have new windshields fully covered by their insurance companies, Farmers has discovered.
Although the rationale appears logical to consumers, the practice is illegal, Farmers maintains. "Replacing a windshield that is not damaged, and then charging the insurance company on the grounds that it is damaged, is considered insurance fraud and is a growing problem nationwide," said Doug Ashbridge, director of special investigations for Farmers Insurance Group.
In many cases, glass companies will rent parking lot space from auto repair facilities, convenience stores, gas stations, or car washes. The glass company representatives, known as glass claim harvesters, will approach vehicle owners, inspect their windshields, and offer to fix or replace them for free, whether or not the glass is damaged.
Once a vehicle owner agrees to the deal, the glass company representative will subcontract the windshield replacement with another, less expensive glass company and turn a profit from the consumer's insurance claim. Some of the more aggressive will even offer vehicle owners incentives, such as free car washes, free steaks, or cash, to replace windshields that are not in need of repair. In some cases, once they obtain the vehicle owner's policy information, the glass company employees will impersonate insureds and submit multiple glass claims. Others will repair windshields and then claim them as replacements, or claim more repairs than actually were performed.
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