Vehicle dumping, aka "give-up"
This type of car insurance fraud occurs when the owner disposes of the vehicle by leaving it somewhere, burning it, dumping it in a lake or even selling it, and then claiming it was stolen. In situations where the car is sold before being reported stolen, the fraud is intended to pay in two ways: 1) through an insurance settlement to replace the stolen vehicle, and 2) through the sale of the original car.
False registration
Where you live is one factor which may affect what you pay for car insurance. Drivers who take part in this scam often live-in expensive parts of the country or in neighborhoods with higher theft rates, so they register their cars in other states or counties where insurance premiums may be lower.
Exaggerated repair costs after a car accident
This type of fraud is often committed by dishonest repair shops. Say you bring your car to the shop after an accident and the mechanics use used parts to make repairs. If they bill your car insurance company for new parts or say the work took longer than it did, they're committing fraud for financial gain. Body shops may also exaggerate repair costs by overcharging an insurer (and a customer) for necessary repairs. By purposely overstating the accident damages, the shop can make money from unneeded repairs.
Faulty airbag replacement
This car repair scam happens when mechanics don't replace the airbag after an accident. According to the National Insurance Crime Bureau, questionable shops may use salvaged airbags to replace a customer's airbag. They may also affix a deployed airbag to a non-deployed steering wheel, making it look like the airbag deployed to increase the insurance claim payout. According to Consumer Reports, some states, like California, passed protective laws regarding airbag replacement. Replacing an airbag with a faulty one can be penalized by a year in prison and up to $5,000 in fines.
Faulty windshield replacement
Windshield fraud can take unsuspecting drivers by surprise. Someone claiming to be a windshield repair specialist may approach you in a parking lot saying your windshield is damaged and needs to be replaced. They'll claim to have just the right kind of windshield on hand and that the service will be completely covered by your insurance company. This scam may also drive up your car insurance rates and possibly put you in danger. These "repair specialists" aren't the real deal and may replace your perfectly fine windshield with a shabby one. They may jeopardize your car insurance coverage if they use your insurance information to submit false claims for windshield replacement under your name.