As dramatic and devastating as those types of insurance fraud are, less noticed frauds happen every day across the country. Put them all together, and they are far more costly in monetary terms than the Richmond Hill disaster.
"The FBI insurance fraud statistics state that everybody who has insurance is paying between $400 and $700 more in their premiums for their insurance," Vetrano said.
Are you an insurance fraudster?
You consider yourself an honest person, and you would not dream of committing a crime, right? But millions of homeowners are guilty of one of the most pervasive types of insurance fraud, known as claim inflation.
"Someone will have an item, part of their property stolen, and they'll either raise the cost of that property or include additional property," Vetrano explained. "And people tend to believe that it's OK because they've been paying insurance premiums for many years and this is kind of a way to recoup some of the money they laid out for insurance."
The problem is even more pervasive when it comes to auto insurance claims. After all, it is easier for a person facing financial difficulties to consider setting fire to their car than it is to think about burning down their home.
"We see more people burning their vehicles to get out of high lease payments or high loan payments," Vetrano said.
But a far more insidious type of auto insurance fraud involves run-of-the-mill accident claims. You may think it is harmless to include in your claim a scratch or dent that was already there, but that, too, is insurance fraud.
In another common scam, it is the body shop — not the policyholder — that instigates the fraud.
"Someone has a little fender bender with their vehicle and they bring their car to the body shop. Maybe they needed a new bumper cover, which could cost $500 to replace," Vetrano explained.
However, your insurance policy has a $1,000 deductible, meaning none of the damage is covered. But the body shop owner has an idea.
"Because you're so nice, we're going to cover your deductible so you have no out-of-pocket expense," Vetrano said.
You are relieved that you will save $500, so you give the go-ahead.
"Then what happens is behind closed doors they'll enhance the damages to the vehicle to make it appear that the vehicle was more damaged than it actually was. And then they'll repair the damages they caused, which will cost them nothing, usually banging out a fender or repainting something. And so that $500 bumper cover turns out to be a $5,000 claim," Vetrano said.
The body shop owner gets to keep the extra cash from the insurance company, and you have not paid a dime.
You become a party to the fraud if you see the statement from your insurance company that your vehicle sustained $5,000 in damages and you do not immediately raise a red flag.
"That happens a lot," Vetrano said. "You won't question it to anybody because you had no out-of-pocket expense."