Fake Insurance Claims Scams
Americans lost $12.5 billion to fraud in 2024, according to the FTC.
Quick Answer
Fake insurance claims scams cost Americans $308.6 billion annually, adding an extra $400 to $700 to the average family's insurance premiums each year.
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How It Works
1
A scammer, who may be a contractor, tow truck driver, or another driver, initiates contact, often after an incident like a car accident or storm.
2
The scammer fabricates or exaggerates a claim. This can include staging a car accident, inflating the cost of repairs, inventing injuries, or a contractor offering to waive a deductible while planning to overbill the insurance company.
3
The fraudulent claim is submitted to your insurance company. The scammer may pressure you to sign documents, like an Assignment of Benefits (AOB), giving them control over the claim and payment.
4
The scammer collects the insurance payout, often performing shoddy or incomplete work, or disappearing entirely. The policyholder is left with the consequences, which can include higher premiums or denied claims for legitimate future damages.
Red Flags
- Unsolicited offers for repairs from door-to-door contractors, especially after a disaster.
- A contractor offering to waive your insurance deductible or providing a bid that is significantly lower than others.
- Pressure to sign documents immediately, especially an Assignment of Benefits (AOB) form.
- A tow truck driver arriving at an accident scene without being called by you or law enforcement.
- The other driver in a minor accident insists on filing a major injury claim or has pre-existing damage on their vehicle.
- Receiving a call or email threatening to cancel your policy unless you provide personal information or immediate payment.
- An insurance agent or company offering a policy at a price that is dramatically lower than competitors.
What to Do If Targeted
- Never sign blank claim forms or an Assignment of Benefits (AOB) without fully understanding it.
- Document everything at an accident scene, including taking photos and videos of both vehicles and getting the other driver's contact and insurance information.
- Call your insurance company immediately to report any incident or claim.
- Use your state's insurance department website to verify that any agent or company is licensed to sell insurance.
- Get multiple written estimates for any repair work and check references for any contractor.
- Do not provide personal or financial information over the phone to someone who calls you unexpectedly claiming to be from your insurance company.
How to Report It
- FTC — File a fraud report with the Federal Trade Commission for scams involving deceptive business practices.
- FBI IC3 — Report any insurance scam that involves online activity to the FBI's Internet Crime Complaint Center.
- National Insurance Crime Bureau (NICB) — Report all types of insurance fraud and theft to the NICB by phone at 800-TEL-NICB or online.
- State Insurance Department — Contact your state's department of insurance or fraud bureau to report suspected scams and check licenses.
- FCC — File a complaint about phone scams, robocalls, or unwanted calls with the Federal Communications Commission.
- AARP Fraud Helpline — Call 877-908-3360 for free support from trained fraud specialists. Available to anyone, not just AARP members.
Key Statistics
- Insurance fraud costs Americans at least $308.6 billion every year. — Coalition Against Insurance Fraud (2022)
- The FBI estimates that insurance fraud costs the average family between $400 and $700 per year in increased premiums. — FBI
- Property and casualty insurance fraud accounts for an estimated $45 billion in losses annually. — Coalition Against Insurance Fraud (2022)
- Life insurance fraud is the costliest category, totaling $74.7 billion annually. — Coalition Against Insurance Fraud (2022)
- Following natural disasters in 2023, an estimated $9.3 billion was lost to contractor and claims fraud. — National Insurance Crime Bureau (2025)
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Frequently Asked Questions
Insurance fraud costs Americans an estimated $308.6 billion each year. The FBI estimates this fraud costs the average U.S. family between $400 and $700 annually in the form of increased insurance premiums. (Source: Coalition Against Insurance Fraud, FBI)
An Assignment of Benefits (AOB) scam involves a contractor or repair person convincing a homeowner to sign over their insurance benefits. The fraudulent contractor then submits inflated claims or sues the insurance company, which drives up costs for all policyholders. (Source: Edison Insurance Company)
A staged auto accident is when a criminal intentionally causes a collision to file fraudulent insurance claims for exaggerated injuries and vehicle damage. Common tactics include the "drive down," where a driver waves you on and then hits you, or the "swoop and squat," where multiple vehicles work together to cause a rear-end collision. (Source: VertexAI)
No, people of all ages are affected by insurance scams. While seniors are often targeted for life and health insurance scams, data shows that consumers in their 20s and 30s are 25% more likely to report losing money to fraud than people over 40. (Source: AARP, Coalition Against Insurance Fraud)
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