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Bargain hunting car buyers are at risk of becoming the fall guy for swindlers trying to scam insurance companies, claim experts. A massive increase in insurance fraud means some vehicles are being sold by conmen and then reported stolen in order to claim on insurance.
Recent figures released by the Insurance Fraud Bureau (IFB) reported that crime costs the insurance industry more than £1.5bn a year and it has resorted to setting up a 'Cheatline' to encourage members of the public to report suspected fraudsters.
"There have been a number of instances where people have reported their vehicles as stolen only for them to subsequently show up for sale in another part of the country," said Roger Powell, General Manager of mycarcheck.com.
"When times are tough people sometimes resort to desperate measures such as getting a friend to 'steal' their car and get rid of it."
"We have heard of examples where these vehicles have been sold on to unsuspecting buyers causing a whole raft of problems for the new owners."
The Association of British Insurers (ABI) has revealed that hoax claims rose by 17% in 2008, with the highest cost coming from the motor insurance sector. Of the 107,000 false claims exposed across all types of insurance including home, motor and travel, more than 30% were from fraudsters claiming on their car insurance.
"Fraud thrives in a recession, so insurers are intensifying their crackdown on insurance cheats," said Nick Starling, director of general insurance and health at ABI.
A survey carried for the ABI found that one in five people admit to being tempted to cheat on their insurance despite the likelihood of being caught.
"Cheating on insurance does not pay - culprits usually get caught. Future insurance will be more expensive and, along with credit, harder to obtain. The only thing offenders are likely to gain is a criminal record," he said.
Many people think that holding back information when applying for insurance is little more than a 'white lie' which will keep their premiums low, but in reality it could end up costing them much more than they bargained for.
"Fraud is fraud," said Roger Powell, whose company mycarcheck.com supplied vehicle data to more than a million customers last year. "Insurance companies are paying out thousands of pounds each day in insurance frauds, and the money has to come from somewhere."
"What these criminals don't realise is that because they are being dishonest, their family, friends, and colleagues - everyone they know that owns a vehicle - is having more money taken out of their pocket to pay for the deficit, because fraud adds approximately £40 to the average insurance policy each year."
The 35,300 estimated claims reported by the ABI amount to a total of £360m each year, meaning £30m each month, almost £7m a week, or £986,000 per day.
"One recent trend we've identified is that individuals who have expensive cars that they committed to buy on finance when times are good, are now finding themselves in financial difficulty and are carrying out insurance fraud out of desperation," said Hayden Roberts, Chief Inspector with Greater Manchester Police's traffic network.
"Some of them may have lost their job but obviously that doesn't change the fact that they have payments to make. The temptation is to get out of the payments and make a quick buck on it."
"It's these individuals who feel the need to facilitate some kind of insurance claim and we are getting a few crimes coming in now where people are reporting that their cars have been stolen, when it's actually something they've organised themselves, so that they can put in an insurance claim."
By Sharon Thompson