Some risks are healthy, and everyone should take them. For example, when you risk missing out on something popular so that you can achieve something better. Or if you take a chance at pouring your heart out to someone you love and not hear, “I love you too.” But some risks, like trying your hand at fraud so you can get rich quickly, are not worth it.
This article talks about a temptation many policyholders face – double-dipping car insurance accident claims. Although there are no official statistics to tell us how often it happens, there is no doubt that it is frequent. Read on and learn more about double-dipping in auto insurance, how it works, and why it is considered illegal.
Double-dipping auto insurance – what is it?
The primary goal of purchasing auto insurance is to protect yourself (financially) if the car is in an accident or damaged due to circumstances beyond your control. If the damage happens due to a collision, the party at fault should repair your vehicle. You can make a third-party claim, and their insurance company will pay for the damages. If your car is damaged due to circumstances beyond your control (there is no party at fault), you can make a first-party claim.
But some policyholders file the same claim with different auto insurers – they make the third-party claim and the first-party claim. Other policyholders, having multiple policies with different carriers, file duplicate claims with different companies.
When a person files duplicate accident claims with the same company or different insurance companies, the action results in double-dipping. Although there is a chance to get paid twice and get away with it, you risk a felony offense charge.
But how does double dipping work in auto insurance work?
How it works in auto Insurance
As we mentioned earlier, double-dipping could be with the same insurance company or different companies.
In auto insurance, the most common reason for claims is collisions. In that case, the driver who is at fault is obliged to meet the repair and replacement costs. You can claim third-party compensation, and the at-fault insurance company will pay for the repair or replacement costs.
However, if you have collision coverage, you could also file the same claim with your insurance company and receive an additional payment!
In the same way, if you have more than one coverage with multiple insurance companies, you could file the same claim with the different carriers. You could receive additional payment for repair and replacement.
Sounds clever? Wrong!
In 2005, after Hurricane Katrina, authorities in Louisiana investigated and discovered several cases of double-dipping. This year, insurance companies have teams ready for response to Hurricane Ida. You can bet the teams will be on the lookout for double dippers.
Although there is a chance that the insurers will not find out, remember that many auto insurers interact directly with repair shops and other auto companies. There is a high chance that the insurer will discover, and you could be charged with a felony offense.
But why is it illegal?
What makes double-dipping car insurance illegal
Double-dipping an accident claim is a sneaky move and is easy to point out as a fraud. However, when a policyholder, having multiple coverages on the same car, files duplicate claims, it does not feel so wrong.
Irrespective of how you look at it, double-dipping auto insurance is wrong and is illegal. Essentially, you get paid twice for one loss.
Double-dipping car insurance is considered a type of fraud, and it is illegal in all states. However, in some states, like Texas, some level of double-dipping is allowed.
If you were injured in an auto accident, you can use personal injury protection coverage alongside your health insurance or auto insurance. But it should only be one claim.
This is not the same as double insuring your car and making duplicate claims. It is possible to have multiple coverages on one car. However, double claims for the same loss would amount to double-dipping. It is illegal. You are better off insuring your vehicle with one company.
If you have a high-end vehicle, consult widely. Insurance rates vary with the model and companies. Some auto insurance companies offer special rates and discounts for federal government employees and military personnel. The high-quality coverage could be more affordable than you thought.
What would happen if you got caught?
When everyone relied on paper records and phone calls to cross-check, one could get away with this type of fraud. Although it was hard to detect, double-dipping was still illegal. There were instances where policyholders were prosecuted.
The digital revolution turned the tables on policyholders. Today, insurance companies can communicate and compare data in real-time. It is much easier to detect double-dipping in auto insurance. When an auto insurance company suspects a policyholder of such fraud, they could report it to the authorities. It would be pursued as a criminal offense. If found guilty, you could pay hefty fines. The auto insurance company will also probably reject the claim on the grounds of it being fraudulent. You could pay for all the repair and replacement costs out of pocket. Plus, every time you look for auto insurance, the record will show, and insurers could hike the premiums.
A final word on double-dipping auto insurance
Double-dipping auto insurance is illegal. You stand a chance to make some extra cash. However, it is devious, and you would be violating the law. If you get caught, you could face criminal charges.
The punishment for double-dipping is severe. Even if you somehow skip the hefty fines, you will pay higher premiums for future auto insurance policies.