Car Theft & Insurance Fraud

Let's make it pretty clear at the outset that we will not talk about the highly popular video game or Ron Howard's 1977 film at all. This article, is about how grand theft auto (car theft, in other words) is linked to insurance fraud. Incidentally, for the uninitiated, the popular video game and Howard's film are both called Grand Theft Auto. While the former allows the player to take on the role of a criminal in a big city (a lowly individual who rises in the ranks of organized crime as the game progresses), Howard's film is about a pair of lovers who elope in a stolen car and make for Vegas...ahem...yes, well, thanks for pulling us back to our topic of discussion.

Obviously, car theft is a crime of theft generally understood to refer to the stealing of automobiles, buses, motorcycles, snowmobiles, trucks, trailers and the like; but not to aircraft, boats, bulldozers, and spacecraft. With apologies for explaining the obvious, we have to say that motor vehicle theft is a crime that leads to the greatest number of fraudulent insurance claims.

On their website, the National Insurance Crime Bureau (NICB) states that, "In the past, vehicle thieves were content stealing cars and trucks the old fashioned way, such as forcing entry and circumventing ignitions. Today, they have new scams for stealing vehicles that are much more difficult to detect. Criminals use fraudulent techniques to steal cars that do not involve smashing windows, disconnecting alarm systems or racing from the scene of a crime."

In almost all jurisdictions, car theft is punishable as a felony owing to the emotional and economic distress it causes to the victim. However, what if a car owner is the perpetrator of the fraud rather than a victim?

According to the NICB, some of the most common car theft fraud schemes include:

Owner Give-Ups: The vehicle owner lies about the theft of his vehicle and then orchestrates its destruction to collect insurance money. He claims his vehicle was stolen, but then it is found burned or heavily damaged in a secluded area, submerged in a lake, or in extreme cases, buried underground.

30-Day Specials: Owners whose vehicles need extensive repairs oftentimes perpetrate the 30-day Special scam. They will report the vehicle stolen and hide it for 30 days -- just long enough for the insurance company to settle the claim. Once the claim is paid, the vehicle is often found abandoned.

Export Fraud: After securing a bank loan for a new vehicle, an owner obtains an insurance policy for it. The owner reports the vehicle stolen to a U.S. law enforcement agency, but in reality illegally ships it overseas to be sold on the black market. The owner then collects on the insurance policy, as well as any illegal profits earned through overseas conspirators who sell the vehicle.

Phantom Vehicles: An individual creates a phony title or registration to secure insurance on a non-existent vehicle. The insured then reports the vehicle stolen before filing a fraudulent insurance claim. Oftentimes antique or luxury vehicles are used in this scheme, since these valuable vehicles produce larger insurance settlements.

However, for genuine victims of car theft, there are a number of anti-theft devices available. As the NICB states, "Some statutes require drivers to stop the engine, remove the ignition key, and lock an unattended vehicle left on a public way. Failure to do so may expose the victim to a fine for a traffic code violation."

Fortunately, for genuine victims and insurance companies, car theft has been in decline in most states over the last decade. Even so, in order to arrest the crime, most US states require vehicle identification numbers (VIN) be registered with a vehicle licensing authority, making it difficult to resell a stolen vehicle or possess stolen parts.

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