Insurance Fraud


When you hear the term “Insurance Fraud” you instantly think of the consumer defrauding the insurance company, however there is a term called “Insurer Fraud” which is the fraud perpetrated upon the consumer.

Forcing Claimants to Accept non-OEM replacement parts.

If you are a claimant, an insurance company may negotiate, but they cannot force you to accept non-OEM parts.  If you are using your own insurance company, your policy may dictate the use of these parts.  You should look into your insurance company policy and see if they will allow you to purchase coverage that will TRULY indemnify you.

In addition to forcing the claimant to not have a fully restored vehicle, the insurer refuses to pay for diminution.  Not only does failure to replace damaged parts with OEM parts further diminish the value of the vehicle, but also puts prospective buyers on notice that the vehicle has been in a collision.

Forcing insured’s and claimants to pay betterment/depreciation for covered repairs.

These are charges the vehicle owner is to pay when they pick up their vehicle.

Most states require for betterment/depreciation to be allowable that:

  1. The value of the entire vehicle to have increased,
  2. The parts replaced be subject to replacement during the normal life of the vehicle.

Refusing to pay for Diminished Value.

Diminution in Value is owed to a third party claimant, and insurers consistently refuse to pay.  Insurers are free to negotiate with third party claimants over the amount of diminution.  Insurers do not negotiate, they steadfastly refuse to pay, and tell claimants they will have to sue to collect the diminished value, knowing they owe the claimant and that it wouldn’t be feasible for the claimant to file litigation just to collect.

Telling claimants they are only entitled to replacment parts that fit.

This is a clear misrepresentation as to well established law regarding the rights of a victim.

Issuing Stated Amount Policies such as “$30,000 or Actual Cash Value“

When the insured makes a claim (where the pre-loss property value had not had not decreased significantly, claiming that the actual cash value of the item is only $8,000).  The insurer charged a premium appropriate for their accepting a $30,000 risk, yet no claims that their liability is less than a third of the risk they accepted and charged for.

This practice is tantamount to post claim underwriting, a practice which is illegal in most states.

Using economic coercion to force you to use their preferred repair vendor.

In most states, you have the right to choose who repairs your vehicle.  Some states require the insurance company to guarantee the work of the repairers they select.  Insurers illegally control their costs by getting unrealistically low bids from contractors, stating the insurer will not pay more than that bid and then stating the claimant had the option to have whomever do the repairs.