Motorcycle Insurance Articles
How Motorcycle Insurance Scams Lead To Higher Premiums For Riders
2011-05-30
Motorcycle insurance scams are, unfortunately, more common than many may imagine but there's no question that not knowing doesn't shield the average Joe from feeling the effects in the form of higher motorcycle insurance premiums. It seems the insurers don't want to shed too much light on this problem for fear that informing the general public about how successful many are at defrauding them will cause more to attempt the same behavior. Scams are perpetrated from both sides, from insurers (or supposed insurers) and from insurance clients as well. Even the authorities may be involved in some insurance fraud and there are more than a few police officers that have been convicted when caught being involved in some type of car or motorcycle insurance fraud.
Any of the various motorcycle insurance scams known to be perpetrated have only one motive, that of obtaining money illegally. These are not victimless crimes, since any time a fraudulent claim is unknowingly paid by a motorcycle insurer, everyone who carries a policy with the defrauded company will, sooner or later, be subjected to higher motorcycle insurance premiums. Millions are spent every year paying bogus claims that appear authentic, hurting both businesses and consumers alike.
Because motorcycles are so easily stolen, broken down into parts to be sold off or remade into a 'custom' bike, one common form of motorcycle insurance scams is to report a bike stolen in order to collect an insurance payout. This ploy is often used by professional crime rings who elicit the aid of unscrupulous motorcycle owners or by the dishonest owners themselves. Recovery of stolen motorcycles is relatively low at about 30%, as they are so easy to snatch and relatively easy to hide away or break down into parts.
Another form of fraud perpetrated on insurers is falsifying information on an insurance application. There are many ways this is done, but one typical way is to declare the location of a motorcycle to be somewhere other than it actually is. A motorcycle owner living and riding his bike in New York City, for example, may declare that the bike resides in rural Pennsylvania instead, in order to obtain a lower premium rate. Motorcycle insurance for a bike in the city is significantly costlier because the perceived risk of driving in that environment is higher. This dishonesty may save some dollars on policy costs but is still fraudulent and illegal.
There are dozens of ways motorcycle scams cause higher motorcycle insurance premiums for everyone else and doing a little research on the Internet can uncover most of these. Every fraud ends up costing consumers and companyies money and should be reported to authorities if discovered.