Beware of schemes that work to defraud auto insurance companies

by Anhony Parenti

Auto insurance fraud is an enormous problem in the United States and one that costs drivers millions of dollars each year. Unfortunately, some people do not realize the severity of this crime and are mistaken that insurance fraud is harmless and acceptable.


Insurance fraud can be as simple as misrepresenting facts on insurance applications, inflating insurance claims, or as serious as staging crashes and submitting false claim forms for injuries or damage that never occurred.

Staged auto crashes have become one of the safest white-collar crimes nationwide and New Jersey incidents rank among the highest. Automobile insurance fraud is a multibillion-dollar business and conservative estimates are that at least 30 cents of every premium dollar goes toward false claims. The insurance industry says phony claims can amount up to $10 billion each year.

One scam involves "squat' collisions where suspects purposely cause a rear-end collision at a stop sign or traffic signal. The suspect driver maneuvers the "squat' car into a position ahead of a selected unsuspecting victim, often a lone person driving a newer-model car. The suspect then brakes abruptly in front of the victim, causing a rear-end collision. As a result of the collision the driver and his passengers all claim injuries. In New Jersey, the operator of the striking vehicle in a rear-end collision is usually deemed to be at fault for either following too closely or driver inattention.

Another popular scam is known as a "swoop and squat.' The faker works a highway with a partner in another vehicle, carefully singling out victims in new cars. They look for distracted drivers whose minds may be elsewhere during commuting hours. Once they select a victim, one car maneuvers ahead and the driver of the "swoop" car cuts in front of the "squat' car, giving the driver reason to stop suddenly. The "squat' driver will suddenly brake hard, later claiming he had to do so to avoid an idiot who cut in front of him with no warning. Invariably, the victim of the scam says perhaps he was following too close and his insurance company pays the faked personal injury and property damage claim.

The best way to avoid being a victim of such scams is to drive defensively. If a vehicle suddenly darts in front of you slow down and increase the distance between vehicles. If you feel multiple vehicles are setting you up, slow down and pull over to the side of the road. If you are involved in a crash, make notes of what happened and of the condition and identity of the other driver and vehicle. Get identification and descriptions of the driver and all occupants. If a collision seems to be set up, immediately advise your insurance company and the local police department. Always drive safely.

Anthony Parenti was Chief of Police in Fanwood for 22 years. He recently retired as director of Stamler Police Academy. He is a past president of the New Jersey Traffic Officers Association and a past president of the New Jersey Association of Chiefs of Police. He has been an advocate for traffic safety since 1967.

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Thanks Chief Parenti for this useful information.