If you’re having trouble paying your monthly car note and can’t sell your car because you owe more than it’s worth, you are not alone. This recession has many Americans in just this exact situation. Some are now resorting to desperate measures to get rid of their vehicles if it gets repossessed, including insurance fraud.
So-called “vehicle give-ups” or “owner give-ups” are on the rise throughout the county. This particular insurance scam involves abandoning your vehicle where it might be stolen or destroyed, arranging to have it stolen, setting it on fire and other similar plots. Car owners then file an auto insurance claim with the hope of recovering the replacement value of the car and paying off the loan.
According to a report from the New York Alliance Against Insurance Fraud, these plots have increased 35% from 2007 to 2008. This report cites an example in which a Bronx man claimed his Cadillac Escalade SUV was stolen from a parking space on the street. After filing a claim with his insurer, the car was found burning in Queens with “no evidence of forced entry.” A surveillance tape later revealed that the car was never parked in the space it was supposedly stolen from.
Vehicle give-ups are not isolated to New York though; they have occurred throughout the country. In one case, a car was found in Lake Erie with the keys in the ignition and a rock tied to the gas pedal. There are even reports of owners parking their vehicles at the beach as a hurricane comes in hoping they will be swept away in the storm. The variations on this scam are as diverse as the owners who perpetrate it.
But insurers and law enforcement officials alike are wise to this scam. State and local officials are on the lookout for abandoned vehicles so they can head off fraud before it happens. For example, Alabama’s Department of Revenue launched an Abandoned Vehicle Information Service this March, which lets subscribers immediately pull title and registration information on abandoned vehicles.
Additionally, insurance investigators are using key indicators to identify potential fraud cases. Some of these indicators include no signs of forced entry or ignition tampering, underwater car loans, delinquent car loans, or an absence of stripped parts and mileage overage for leased vehicles. If an investigator can collect enough evidence, the insurance claim can be denied, leaving owners still on the hook for the car’s payment even though they no longer are in possession of it.
On top of that, some fraudsters may be prosecuted for their crime. An elementary school principal in New Jersey was convicted of car insurance fraud in February for having her car torched to get an insurance payout. The crime carries a maximum sentence of five years in state prison. Even worse, an Idaho man will spend eight years in state prison for arson for the same type of plot.
The bottom line is that trying to get rid of your car in this way is both idiotic and illegal. Not only could you end up having to pay for the loan anyway when your claim is denied, you could also be sent to prison if you are prosecuted. You’re better off giving the car back to the lender and taking the hit on your credit. Or you can talk to your lender and try to make an arrangement for a loan modification or car refinance.
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