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Car Theft and Insurance Fraud. How People Get Caught.

Obviously, car theft is generally understood to refer to the stealing of automobiles, buses, motorcycles, snowmobiles, trucks, trailers and the like; but not to aircraft, boats, bulldozers, and spacecraft. And though you might not think it, car theft is a crime that leads to the greatest number of fraudulent insurance claims than anything else.

On their website, the National Insurance Crime Bureau (NICB) states that, "In the past, vehicle thieves were content stealing cars and trucks the old fashioned way, such as forcing entry and circumventing ignitions. Today, they have new scams for stealing vehicles that are much more difficult to detect. Criminals use fraudulent techniques to steal cars that do not involve smashing windows, disconnecting alarm systems or racing from the scene of a crime."

In almost all jurisdictions, car theft is punishable as a felony owing to the emotional and economic distress it causes to the victim. But what if a car owner is the perpetrator of the fraud rather than a victim? What if the car is never really stolen?

Car Theft Fraud Schemes According to the NICB, some of the most common car theft fraud schemes include:

Owner Give-Ups: The vehicle owner lies about the theft of his vehicle and then orchestrates its destruction to collect insurance money. He claims his vehicle was stolen, but then it is found burned or heavily damaged in a secluded area, submerged in a lake, or in extreme cases, buried underground.

30-Day Specials: Owners whose vehicles need extensive repairs oftentimes perpetrate the 30-day Special scam. They will report the vehicle stolen and hide it for 30 days—just long enough for the insurance company to settle the claim. Once the claim is paid, the vehicle is often found abandoned.

Export Fraud: After securing a bank loan for a new vehicle, an owner obtains an insurance policy for it. The owner reports the vehicle stolen to a U.S. law enforcement agency, but in reality illegally ships it overseas to be sold on the black market. The owner then collects on the insurance policy, as well as any illegal profits earned through overseas conspirators who sell the vehicle.

Phantom Vehicles: An individual creates a phony title or registration to secure insurance on a non-existent vehicle. The insured then reports the vehicle stolen before filing a fraudulent insurance claim. Oftentimes antique or luxury vehicles are used in this scheme, since these valuable vehicles produce larger insurance settlements.

However, there are still some cases of real car theft out there. For genuine victims of car theft, there are a number of anti-theft devices available, such as alarm systems and steering wheel locking devices.

Fortunately, for genuine victims and insurance companies, car theft in its truest sense has been in decline in most states over the last decade. Even so, in order to arrest the crime, most US states require vehicle identification numbers (VIN) be registered with a vehicle licensing authority, making it difficult to resell a stolen vehicle or possess stolen parts. So make sure you're up to date on your paperwork at all times, just in case.

See how much you could save today on your car insurance. Get your free auto insurance quotes today!

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