Top 5 Car Insurance Scams in the U.S. and How to Avoid Them

Quick Summary: Car insurance scams are on the rise. From staged accidents to ghost brokers, drivers are being targeted in clever ways. This guide outlines the top 5 schemes, how they work, red flags to watch for, and how to protect yourself in 2025.

1. Staged Accidents

How it works: Scammers intentionally cause a minor crash—like brake-checking you—then file exaggerated injury or damage claims against your insurance.

Red flags:

• Drivers acting overly dramatic or “too prepared” after a crash
• Multiple passengers all claiming injury
• Insistence on using a specific repair shop or clinic

How to avoid it: Always install a dash cam and call the police to document every accident.

2. Fake Insurance Agents (“Ghost Brokers”)

How it works: Scammers sell you a fake or forged insurance policy—often at a very low rate—and disappear with your money.

Red flags: No verifiable website, no license info, pressure to pay in cash or gift cards.

How to avoid it: Always verify the agent’s license with your state’s Department of Insurance.

3. Inflated Repair Estimates

How it works: Body shops collude with scam artists or adjusters to exaggerate repair costs—or bill you for work never done.

Red flags: Vague estimates, refusal to provide parts/labor breakdown, billing your insurer without approval.

How to avoid it: Use insurer-approved repair shops or get second estimates from a reputable garage.

4. “Swoop and Squat” Collisions

How it works: A vehicle “swoops” in front of you, brakes suddenly, and a second car “squats” beside you to block escape. They blame you for the crash.

How to avoid it: Leave safe following distances, use dash cams, and report suspicious driving.

5. Fake Injury Claims

How it works: People involved in a minor fender-bender file exaggerated injury claims (whiplash, back pain, etc.) to get large payouts.

How to avoid it: Call police after every incident, take photos, and notify your insurer immediately.

What to Do If You Suspect Fraud

If you believe you’ve encountered a scam:

• Call your insurer and report it immediately
• Contact the National Insurance Crime Bureau (NICB)
• File a police report

Never confront suspects directly—let professionals investigate.

Real Case: Ghost Broker Arrested in Texas

Example: In 2024, a woman in Houston was caught selling over 150 fake insurance policies. Victims drove uninsured for months, only finding out during roadside stops or accidents. The broker is now facing federal charges.

FAQs About Car Insurance Scams