Officials in nearly a dozen state and local jurisdictions around the U.S. report clear warning signs that so-called owner give-ups are rapidly spreading. The signs include recent increases in suspected vehicle arsons, rising investigations of suspected give-ups, and in some cases a spike in arrests, the coalition reports.
“Insurance fraud normally increases during a troubled economy. The credit crunch, subprime meltdown, higher gas prices and general economic distress have led more drivers to seek a bailout through insurance money. They’re literally being driven to desperation,” says Dennis Jay, executive director of the coalition.
Drivers typically torch their vehicles, sink them in waterways, simply abandon them in remote areas, or even sell them to chop shops. The drivers then tell their auto insurer that someone stole the vehicle. This is a traditional insurance scheme that is rapidly spiking this year, Jay says.
Among the findings in the fall issue of the coalition’s flagship publication Fraud Focus:
Arrests increased 25 percent in New York, with most happening in the New York City area, the insurance department says.
In New Jersey, suspected vehicle arsons rose from 59 in 2004 to 94 by August 2008, the state fire marshal says.
In Ohio, where unemployment has hit a 15-year high, vehicle arsons reached 3,168 last year compared to 2,872 in 2006, the fire marshal says. In Columbus, vehicle fires rose from 140 in 2005 to 202 in 2006.
In California, insurers had referred 50 percent more suspected giveups to the insurance department the fiscal year ending June 30. In Fresno County, 12 people allegedly ran a ring that burned vehicles for clients.
In Utah, the fraud bureau was investigating 30 suspected giveups as of early September, compared to a normal caseload of one or two.
In Arkansas, the fraud bureau logged 18 suspected giveups just in July and August compared to a normal caseload of one or two for the entire year, the fraud bureau says.
State Farm reports a substantial increase in suspected giveups in Florida, and local law enforcement is seeing a spike in the Miami area.
Insurers and police are on the lookout for these frauds, so it’s a lousy way of trying to get out of a financial jam, says Jay. “Getting rid of your car this way likely will result in a criminal record and possibly jail, but you still have to pay the car loan and now you have no transportation.”