Daily Auto News Falling Behind on Payments, Many Resort to Insurance Fraud
Daily Auto News
The declining economy has been hard on those who took out loans to buy expensive upscale trucks and SUVs in better times, when gas was cheaper. According to a new report, people falling behind on car payments are increasingly resorting to a sad scheme in order to try to escape the payments — they’re burning the cars. It often isn’t working.
The Washington Post explains, “Investigators estimate that hundreds of such crimes occurred in the Washington area in the past two years, although the exact number is unclear, and experts predict the number will increase because of the worsening economy.” Auto loan defaults are near 20-year highs this year, and “historically, such arsons go up as people fall behind on car payments.” They often burn the cars, rather than simply selling them for parts and reporting them stolen, because they hope to receive an insurance payout after reporting the vehicle stolen.
The UPI adds, “Insurance industry data indicate U.S. ‘potential owner give-ups,’ most of which involve burned cars, increased from 511 in 2004 to 986 in 2007. But those numbers represent only a ‘small percentage of the reality out there,’” according to Frank Scafidi, a spokesman for the National Insurance Crime Bureau.
Kicking Tires adds, “Most people who torch their cars do it in a remote location. Torching a car leaves little evidence for insurance companies to find and makes prosecution difficult.”
But some people are prosecuted. According to the Post, “To distinguish frauds from fires set by car thieves, investigators scrutinize arson cases involving vehicle models not normally stolen.” Those who are caught face charges of insurance fraud and arson.
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