A $6.9-million grant given to LA County investigators aims to crack down on dangerous auto insurance fraud rings that cost ratepayers millions of dollars a year, officials announced Monday.
“While this is a big issue statewide, unfortunately, Los Angeles has dubious distinction of being the auto fraud capital of the Golden State,” said Dave Jones, commission for the California Department of Insurance.
Last year alone, more than 7,700 auto insurance fraud claims investigated by state officials came from LA County. That’s nearly half – 43 percent – of all auto fraud claims made in California, Jones said.
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Insurance ratepayers in Los Angeles pay between $200 and $300 more in premiums each year because of auto insurance fraud, which last year cost insurers about $143 million and involves staged or intentional crashes carried out with the goal of collecting insurance money.
The crime rings are made of three levels, according to LA County District Attorney Jackie Lacey:
- Professionals like doctors who diagnose phony injuries, and lawyers who file fraudulent claims.
- Cappers, or middle men, who obtain cars to crash
- “Victims” who are recruited by the cappers and paid up to $100 to be behind the wheel or in the passenger seat of a car when it collides.
Lacey said these phony victims are usually recruited in front of fast food restaurants, and then file claims for medical services they did not receive for injuries they did not suffer.
At a news conference Monday, insurance and law enforcement officials warned drivers to always drive defensively and leave space between them and the car ahead.
If traffic appears to be moving freely and the car ahead suddenly stops with no explanation, Jones said that’s a red flag the driver may be trying to stage a collision.
Another “tell-tale sign” of auto insurance fraud is if a witness suddenly materializes whose story matches – almost verbatim – what the driver says, Jones said.
Newly issued auto insurance and an “overabundance of passengers in the car” may also suggest fraud, Jones said.
If drivers suspect their crash is staged, Jones said they should insist on filing a police report, get the names and contact information for all parties involved – driver, passengers and witnesses – and call the Department of Insurance at 1-800-927-4357.
Expensive cars or government vehicles are more likely to be targeted, because they are more likely to have insurance that could benefit the scammers.
About $2.3 million of the grant from the Department of Insurance will go toward targeting organized auto insurance fraud, while the remaining $4.6 million will be allocated to fight auto insurance fraud in all facets, Jones said.
This year’s grant is $100,000 more than last year’s, Lacey said. It will pay for 12 prosecutors and seven investigators in the county’s auto insurance fraud division.
Statewide, more than 1,500 individuals have been arrested in connection with auto insurance fraud, Jones said.
Depending on the size of the ring and the amount of money involved, fraudsters could face more than just time in county jail.
The head of a fraud insurance ring in LA County was sentenced last year to 26 years in state prison, Lacey said.
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