Avoiding Car Repair Insurance Scams and Frauds

Car repair insurance scams are a common problem that can leave you with a hefty bill and a damaged relationship with your insurance company. Be cautious of companies that claim to offer "optional" coverage that's actually mandatory.

Some scammers may try to sell you unnecessary add-ons or upgrades, like "extended warranty" or "deductible waiver" plans. These plans can cost hundreds or even thousands of dollars and offer little to no actual protection.

If you're unsure about what's covered under your policy, ask your insurance agent for a clear explanation. They should be able to provide you with a detailed breakdown of your coverage and what's included.

Don't fall for companies that use high-pressure sales tactics or try to rush you into making a decision. Take your time and do your research before committing to any car repair insurance policy.

Auto repair shops may use counterfeit or used parts, charging for high-end parts, or perform substandard work or no work at all, and then bill customers for the services.

Padding charges is another scam where mechanics inflate the actual charges billed for services, often leaving the estimate blank and filling in the inflated amount later.

Some repair shops may also present customers with issues that don't actually exist, known as "needless repairs."

A common scam is the "dirty air filter scam", where a mechanic shows a customer a black air filter that is not actually theirs, claiming it needs to be replaced.

Other scams include "specials and maintenance hook schemes", where auto shops advertise great deals, but then charge for unnecessary services.

Here are some common types of car insurance scams:

Auto repair scams are a common problem, and it's essential to be aware of the tactics used by dishonest repair shops. Insurance companies lose at least $29 billion a year due to insurance scams, which means that fraud is accounted for in all auto insurance policies.

Some repair shops use stolen, previously deployed, and salvaged airbags to replace a customer's deployed airbag, billing the insurance company for the retail value of a new one. This is known as airbag fraud.

Beware of bogus repair-cost quotes when you drop your vehicle off for service. Initial repair quotes may be on the cheap side, but the final bill can be much higher, sometimes by $1,000 or more.

Airbag Fraud is a serious issue that can leave you with a faulty airbag and a hefty bill. Dishonest repair shops often use stolen, previously deployed, and salvaged airbags to replace a customer's deployed airbag.

These shops pay very little for these airbags and then bill your insurance company for the retail value of a new one. They can make a significant profit from this scam.

Some unscrupulous shops will even attach a deployed airbag to the steering wheel of a vehicle that contains a non-deployed airbag, creating the illusion of a deployment and increasing the insurance claim amount.

To protect yourself, review NICB's "Tips on Air Bag Theft and Fraud: Deflating a Growing Crime Trend" for guidance on air bag theft and replacement.

Auto laws are in place to protect you from auto repair scams, and it's essential to know what they are. Making fraudulent car-related claims is a crime in all 50 states.

Auto insurance fraud laws vary by state, but most have established bureaus to conduct investigations. Fraudulent claims can be either a felony or misdemeanor, depending on the nature and extent of the scam.

Soft fraud, which involves exaggerating an existing claim, is typically considered a misdemeanor. Auto insurance fraud penalties for such scams often include fines, jail time of up to a year, community service or probation.

Hard fraud, which involves causing or fabricating a loss for insurance payments, is nearly always considered a felony. These cases can result in incarceration in prison for several years.

Top giveaways that may prompt an auto insurance fraud investigation include claimants appearing calm and unflustered after submitting a large claim, handwritten receipts for repairs on a covered item, and someone adding to or increasing their insurance coverage before submitting a claim.

Kickbacks can be a sly way for unscrupulous collision repair shop owners to get what they want. They may offer bribes to individuals in exchange for referring claimants to their shop.

These bribes can take many forms, but the goal is always the same: to get your business and make a profit, no matter the cost. Be wary of anyone who seems overly eager to help you with your insurance claim.

Unscrupulous collision repair shop owners may offer bribes to various individuals, including adjusters, estimators, and even law enforcement. They may also offer incentives to medical providers and attorneys to refer claimants to their shop.

If you're approached with an offer that seems too good to be true, it probably is. Don't let greed cloud your judgment – stick with reputable and licensed repair shops.

Chop shops are a type of dishonest repair shop that serves as a front for individuals and/or crime rings.

They disassemble stolen vehicles and sell the parts to disreputable repair shops.

These shops often have a legitimate-looking façade, but behind the scenes, they're involved in the theft and resale of stolen vehicle parts.

Chop shops can be difficult to identify, but looking for suspicious activity, such as a high volume of vehicles being brought in and out of the shop, can be a red flag.

They may also have a large inventory of used parts that can't be easily accounted for.

In some cases, chop shops may even have connections to organized crime rings that orchestrate the thefts.

Double Charges can be a sneaky way to overcharge you for car repairs. Car mechanics typically replace spark plugs and coils at the same time because you need to take out the coils to remove the spark plugs.

To avoid being overcharged, it's essential to read up about your car and how it works. This way, you can ask your mechanic questions before and after getting service.

Knowing more about your vehicle is also crucial so you don't accidentally waste money on unnecessary repairs. Peter Mann from SC Vehicle Hire warns that unscrupulous mechanics may double-charge you for the number of hours to do this work.

By being informed and asking the right questions, you can protect yourself from double charges and save money on your car repairs.

Overcharging for parts is a common scam that can catch car owners off guard. Many mechanics put pressure on customers by stating that they will buy and replace parts themselves and add it to the bill at the end.

Buying parts yourself can be a more convenient and definitely cheaper option. Michael Lowe, CEO of Car Passionate, recommends doing your own research about the parts that need replacing, even if it means waiting an extra day to get your car fixed.

Inflated estimates for parts can also be a problem. Some dishonest collision repair shops will estimate charges for parts that will never be installed or exaggerate the amount of damage to the vehicle, leading to unnecessary and costly repairs.

A firm quote is essential to avoid surprise final bills. Make sure to get a quote that includes all the costs upfront, so you're not hit with unexpected charges when you pick up your car.

Take lots and lots of photographs – of the other vehicle, the registration and inspection stickers, of the scene, the damage, the license plate, and if you can, a photograph of the other driver.

A police report helps protect you against people committing fraud who might further damage their own car following the accident to pump up their claim. So, be sure to call 911.

Never sign a blank claims form.

Contact your auto insurance carrier immediately after the crash, regardless of whether you believe you’re at fault. Don’t admit fault to anyone at the scene.

Auto repairs are like a doctor’s diagnosis—a second opinion is something that should always be sought out. Take your car to a trusty and trustworthy mechanic who can give you an honest assessment of the needed repairs.

Be aware of these common car-repair scams so that you’re prepared the next time you head to the shop.

Unscrupulous collision repair operators are key contributors to the nation's insurance fraud problems. They engage in various types of scams, including airbag fraud, chop shops that dismantle and resell stolen vehicle parts, and shops that inflate vehicle damage estimates.

Beware of bogus repair-cost quotes when you drop your vehicle off for service. These quotes are often on the cheap side to get your approval, but the final bill can be significantly higher.

Make sure your quote is firm before leaving your car in their hands. A final bill that's higher by $1,000 (or more!) compared to the quoted cost is a common surprise.