In the last of my impromptu series of blog posts about home insurance and car insurance fraud, I thought I would post some real-life examples of insurance fraud.
The following examples (all of which are from the USA) are sourced from the
Coalition against Insurance Fraud (USA), and are tragic examples of how car insurance fraud, home insurance fraud and life insurance fraud are not victimless crimes.
Car insurance fraud
In 1997, Long Beach California, two men attempted to stage a car accident to collect car insurance money by stopping suddenly on a freeway in front of a tractor. Unfortunately, Juan and Maria Lopez, and their 2 year old daughter were following the tractor in their car. When the tractor stopped in front of them, a gravel truck rammed the Lopez family from behind, killing the young family. The two men who had committed this act of car insurance fraud, resulting in the tragic death of the Lopez family, each received 11 years in prison.
Contents insurance fraud
Once again in California, a software distributor had a lot of out-of-date merchandise he wasn’t able to sell. The merchandise was insured under his business contents insurance. In 1994, the Northbridge earthquake occurred, so the distributor ordered his staff to destroy the merchandise so he could claim it all under earthquake damage on his contents insurance. An employee reported the contents insurance fraud however, and the distributor received over 4 years in prison.
Building insurance fraud
A restauranter in Tampa hired two teenage boys to burn down her restaurant so she could collect building insurance money in 1996. The arson attempt went horribly wrong, and one boy died while the other was permanently scarred. The restauranter was sent to prison for 30 years.
Home insurance and contents insurance scam
Last year in Indiana, USA, a massive home insurance fraud scheme was uncovered. Kenneth Allen led a gang of 30 people who torched at least 50 houses for home insurance and contents insurance claim payouts, costing insurers millions. Gang members bought cheap houses, packed them with furniture and appliances and took out home insurance and contents insurance policies with inflated coverage values. Allen and his team then burnt down the houses, and used the home and contents insurance claim payouts to buy more properties to continue the fraudulent scheme. In one example, a house was bought for just $20,000 but the house insurance policy listed the value of the house at $150,000.
With increasingly suspicious house fires occurring, and the same policyholders appearing repeatedly on the home insurance and contents insurance policies, insurers uncovered the scheme, and Allen was sent to prison.
These examples show how even seemingly victimless occurrences of insurance fraud, such as stopping suddenly in front of another car to fraudulently collect car insurance claim money, can go horribly and tragically wrong. You can head to the American ‘Coalition against Insurance Fraud’ website, which contains many more shocking examples of car insurance, home insurance and contents insurance fraud.