Staged car accidents – fraudulent schemes designed to exploit insurance systems – are occurring more frequently on roads across the US.
According to the Insurance Information Institute, the increase in these incidents is becoming a significant concern in California, New York and Florida.
Mark Friedlander, a spokesman for the institute, told Fox Business that “unscrupulous actors” are increasingly using busy roads to cash in on collisions and insurance payouts, especially in high-traffic states.
“We have seen these types of auto fraud scams for many years. This is not a new thing. But we’re seeing an uptick in many areas,” Friedlander said.
“You typically see them on interstates in highly populated, highly congested areas of the country,” he said.
The institute’s analysis of 2022 and 2023 industry data shows a 14% year-over-year increase in phase-out crashes in New York and a 58% increase in New Jersey, the highest in the US.
California recorded the most phaseout crashes in 2023 with 5,366 cases. New York is second with 1,729, followed by Florida with 1,110.
Friedlander said this trend is also increasing due to the ability of criminals to avoid prosecution.
“Although states are trying to crack down on these schemes, many fraudsters operating in these states are not being caught,” he said. “As they become more brazen, more daring in having accidents on stage, it multiplies,” he said.
Friedlander said Allegedly faked car accident on Belt Parkway in QueensNew York, which went viral after being captured in dash camera footage, is an example of “how brazen and bold these unscrupulous actors are becoming”.
The dash cam of the victim’s car shows a silver Honda cutting her off, before it stops and reverses behind her.
A spokesperson for the New York City Police Department told Fox Business that detectives have interviewed the victim, and the investigation is ongoing by the NYPD Criminal Enterprise Investigation Unit’s Fraudulent Collision Investigation Squad.
Friedlander said this scenario is rare. Typically, the victim is trapped between the two cars involved in the scheme. One car will apply brakes from the front and the other car will hit the victim from behind.
In some cases, these criminals are “working in collaboration with unscrupulous medical professionals such as theft clinics, as well as unscrupulous attorneys who work with them to prosecute victimized drivers,” he said.
While these staging accidents are costing insurers about $20 billion a year, all drivers are forced to do is “cover the losses the insurance companies suffer from these fraudulent schemes,” Friedlander said.
He estimated that staged accidents cost each American driver $100 to $300 more in annual auto insurance premiums.
A recent report published by insurance comparison shopping website Insurify shows that the average US rate for full auto insurance is expected to rise to $2,329 in the first half of 2024.
This represents an increase of 15% from 2023 and a staggering 48% compared to 2021.
