The Maryland Insurance Administration (MIA) said “crash and buy” auto insurance schemes are a growing trend in the state.
When an uninsured driver crashes, buys insurance, then claims the accident happened after the policy took effect, that is fraud and a felony that could result in fines or jail time, the MIA said in its March 23 announcement. Such “crash and buy” schemes constitute a quarter of the fraud investigations conducted by the MIA, the independent state agency charged with enforcing insurance laws.
“It’s this kind of illegal action that hurts all consumers,” said Maryland Insurance Commissioner Al Redmer, Jr. “Everyone ends up paying higher premiums when someone cheats an insurance company.”
The MIA cited a recent case of a Forestville, Maryland, woman who totaled her car after hitting a Metro transit bus. She then purchased insurance coverage before reporting the accident in a bid to get the insurance company to pay for the vehicle’s damage. In February, the driver was ordered to reimburse the insurer more than $15,000 and to pay a $4,500 penalty to the MIA for committing fraud.
The MIA said it has taken action on 36 such civil fraud cases since the state agency recently gained authority to pursue civil cases. To date, the MIA has assessed $141,500 in penalties and ordered $56,845 in restitution for these cases.
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