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Lied to Your Insurance Company? You've Committed Fraud.

By Ryan Hurlbert on October 2nd, 2010

A San Jose, Calif. man was arrested and charged with auto insurance fraud for filing six insurance claims on existing damage to his two vehicles. In a two-month period, he filed false claims against Allstate, 21st Century, AIG (now 21st Century), Esurance and Travelers Insurance. He now faces up to five years in prison and a $10,000 dollar fine for each charge.

Insurance fraud raises the car insurance rates we all pay. Billions of dollars are wasted every year on fraudulent claims, and more people are guilty than you think. Hold out for a couple extra "therapeutic massages" or a few extra chiropractor visits, and you are guilty of fraud. Asking the body shop to throw in a couple of door dings or a touch-up of unrelated damage on your claim is fraud. Claiming that your "check engine light" was not on prior to the accident when you had been staring at it for weeks is fraud.

Everyone pays for fraud with higher rates

Fraud comes in all shapes and sizes, and even small amounts add up. According to California Insurance Commissioner Steve Poizner, "When you lie to your insurance company, you commit insurance fraud. Committing insurance fraud is never worth the legal trouble, fines and possible jail time you will face."

You can help reduce insurance fraud, and help drive down your auto insurance rates. If you are involved in an accident, write down the names of everyone in the other car. Get an address and phone number if possible. Document the damage to your car. A disposable camera left in the car is OK, but your cell phone or digital camera is a safer bet. Over time, the heat inside your car could damage the film or camera. If pictures are not an option, draw a rectangle, label the "front" and circle the area where the damage occurred. Be sure to give a full, detailed explanation of everything that happened and everyone who was involved to your car insurance company when you file your claim.

Oh, and don't lie to your insurance company, like Poizner says, it's fraud.

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