How not to participate in a "staged" traffic accident

In most circles  “scratch and win” and “30 day special” are references to lotteries and retail sales respectively.  But to the fraud squad,  these terms are used by criminal elements fleecing insurance companies.

A “scratch and win” is a staged accident and the “30 day special” occurs when an owner hides a car, reports it stolen and trades up with the insurance payout.  Insurance fraud in Canada is costing companies about $1.3 billion per year with automotive crimes leading the pack.  Other costs incurred by police, fire fighters and the health care system cost another $1 billion.  Automotive theft including non fraud incidents is costing about $600 million per year. 

The insurance industry is fighting back: they retain accident reconstruction engineering firms. From dozens of macabre scenes of  tangled wreckage and blood stained seats, reconstruction reports are matched against statements of the claimants. The findings point fingers as millions of dollars hang in the balance.

 “The major insurance companies will not hesitate to spend any kind of money on a strong engineering report that will at the claimant,” said Gary Neinstein, of Neinstein and Associates, a law firm specializing in motor vehicle litigation. Sometimes a speck of paint is all an insurance company needs to create doubt about fault and have a claim dismissed or reduced. Sometimes a  six figure claim can be sliced in half if the claimant was not buckled in. 

“They will use an engineering firm to establish that the injury would have been significantly reduced had a seat belt been worn,” said Mr. Neinstein. Although most engineering investigations cost about $5,000-$6,000, more elaborate investigations are in the $15,000-$20,000 range.  But it can be a good investment. 

“I won a $1 million [case] just last fall.  One of my colleagues won a $5 million one,” says Scott Walters of Walters Forensic Engineering.  Mr. Neinstein’s firm has seen a $6 million claim paid.  These numbers send chills through the corridors at CIBC Insurance.

“We always try to act in the best interest of our clients first and protect company assets.  Breaching $80-$100,000 [claim per person] is large. [CIBC] would be at risk for each person in that vehicle…” says George Bearse, CIBC national special investigation unit leader.

Mixing Canada’s litigious character with clogged highways and increasing fraud places new pressures on plaintiffs and defendants to sway juries in the high stakes insurance endgame.

 “It’s a real dog and pony show.  Experts are coming out with theories that have not been proven scientifically and they are trying to pull the wool over the court’s eyes…” said Mr. Neinstein.