California, Florida, New York face biggest rise in auto insurance fraud

Staged car accidents – fraudulent schemes designed to exploit insurance systems – are becoming more frequent on roadways across the U.S.

The rise in these events is becoming a significant concern in California, New York and Florida, according to the Insurance Information Institute.

Mark Friedlander, institute spokesperson, told FOX Business that “unscrupulous actors” are increasingly capitalizing on busy roadways to stage collisions and cash in on insurance payouts, particularly in high-traffic states.

“We’ve seen these types of auto fraud scams for many years. This is nothing new. But we’re seeing an uptick in many areas,” Friedlander said.

REAL ESTATE SCAMS ARE ON THE RISE – HERE’S WHAT TO LOOK OUT FOR

“You typically see them on interstates in highly populated, highly congested areas of the country,” he added.

The institute’s analysis of industry data from 2022 and 2023 shows a 14% increase in staged accidents on an annual basis in New York and a 58% spike in New Jersey, among the highest in the U.S.

Traffic on Interstate 110 in Los Angeles on Nov. 13, 2023. (Kyle Grillot/Bloomberg via / Getty Images)

California recorded the highest volume of staged accidents in 2023 with 5,366 cases. New York ranked second with 1,729, followed by Florida with 1,110.

Friedlander said the trend is also being exacerbated by the perpetrators’ ability to evade prosecution.

VISA REPORT HIGHLIGHTS EMERGING SCAMS TARGETING CONSUMERS AND TRAVELERS

“While states are trying to crack down on these schemes, many of the fraudsters that operate in these states are not being caught,” he said. As they “continue to be more brazen, more bold in causing stage accidents, it multiplies,” he added.

Friedlander said the alleged staged car crash on the Belt Parkway in Queens, New York, which went viral after being caught on dash camera footage, is an example of “how brazen and bold these unscrupulous actors are” becoming.

Drivers sit in traffic on southbound Interstate 5 during the afternoon commute heading into downtown San Diego on March 12, 2024. (Kevin Carter / Getty Images)

The dash cam on the victim’s car shows a silver Honda cutting her off before it proceeded to stop short and reverse into her.

A spokesperson for the New York City Police Department told FOX Business that detectives have interviewed the victim, and the investigation remains ongoing by the NYPD Criminal Enterprise Investigation Unit’s Fraudulent Collision Investigation Squad.

Friedlander said the scenario is rarer. Typically, the victim is sandwiched in between two cars that are involved in the scheme. One car will slam on its brakes in the front and another car will hit the victim from behind.

Traffic on Interstate 95 in Baltimore, Maryland, on April 4, 2024. (Nathan Howard/Bloomberg via / Getty Images)

GET FOX BUSINESS ON THE GO BY CLICKING HERE

In some cases, these criminals are also working “in collaboration with unscrupulous medical professionals like injury clinics, as well as unscrupulous attorneys that work with them to sue the drivers that are the victims,” he said.

While these staged accidents are costing insurers roughly $20 billion per year, all drivers are forced to “cover the losses incurred by insurance companies from these fraud schemes,” Friedlander said.

He estimated that staged accidents cost every U.S. driver $100 to $300 more in annual auto insurance premiums.

A recent report published by Insurify, an insurance comparison shopping website, shows the average U.S. rate for full auto insurance surged to $2,329 in the first half of 2024. That marks a 15% increase from 2023 and a stunning 48% spike when compared with 2021.