Individuals are torching their vehicles in remote deserts, they're pushing them off cliffs, and they're sinking them in lakes or ditching them in Mexico in the hopes of getting their insurance policies to pay off, fraud investigators say.
Nationwide, suspicious vehicle fires or arson increased 27% in the first quarter of this year compared with a year earlier, according to the National Insurance Crime Bureau, an industry-supported agency that investigates all types of insurance fraud. So-called owner give-ups -- cars intentionally destroyed or abandoned -- jumped 24%.
Lighting up a Beamer is one of the more dramatic types of suspected insurance fraud that's increasing in this economic downturn, the deepest in more than half a century. But it's not the only one. Suspicious personal injury slip-and-fall claims increased 60% in the first quarter; staged car accident cases were up 34% and commercial property fire/arson cases jumped 76%.
Some consumers figure that they've paid premiums year after year, experts said, and that their insurers might not closely check every single claim. In fact, investigators say they tend to be particularly busy during tough economic times when an increasing number of policyholders are caught in financial crunches.
"When the economy goes south, crime goes up," said Frank Scafidi, a crime bureau spokesman in Sacramento.
Investigators say the number of suspected give-ups, which are often hard to prove, is minuscule compared with the more than 1 million vehicles reported stolen each year. They acknowledge that suspected fraud may be under-reported because insurers can't meticulously investigate every vehicle fire or disappearance. Nevertheless, they said, the trend is clearly accelerating with 757 suspected vehicle fires nationwide in the first quarter of 2009, up from 596 in the same period last year.
Crime bureau investigators found a direct correlation between owners missing multiple car payments and the filing of false insurance claims. Rising gasoline prices also appear to be linked to suspected fraud cases involving fuel-sucking SUVs. A soft used-car market also has consumers looking to their insurers for relief -- albeit illegally.
"People think it's an easier out if they can no longer afford a car, but, unfortunately, it's a crime," Scafidi said.
Owners desperate enough to burn or ditch their own cars are asking for trouble, warned John Standish, the automobile insurance fraud bureau chief for the California Department of Insurance.
If caught, "they're still saddled with settling the debt even though the car is not drivable," he said, plus they could wind up with a felony conviction for insurance fraud and a sentence of as many as five years in prison.
Any scheme to commit auto insurance fraud usually involves conspiracy, said Mike McKee, a crime bureau special agent who covers all of Southern California. "Family and friends are involved," he said. "It's not a spur-of-the-moment thing because there's a lot of criminal intent and forethought."
Owner give-ups fall into two categories, McKee said. The most common is the amateur job, which usually involves the owner and a couple of relatives or friends. Professional rings charge a car owner as much as $500. The car or truck is either driven to Mexico for resale on the black market or taken to a "chop shop" to be stripped of its most valuable parts. Owners are instructed to wait three days before filing a stolen-car report.
One thing the professionals never do is set the cars on fire, McKee said. They want the money from the resale, and they want to keep as low a profile as possible.
"It doesn't make sense for crooks to risk a felony charge by stealing a car, taking it to the desert to torch it and walking home," he said, noting that law enforcement presence in the desert has grown as part of a campaign against illegal immigration.
Most amateur owner give-ups "make no sense in the real world," McKee said, citing the recent case of Don and Orlando. (Investigators asked that full names not be used while the case remains open.)
Don, who lived in the Inland Empire, was $1,400 behind on payments and had just lost his job. He allegedly paid Orlando $300 to drive the car out to the desert and burn it.
Before taking the keys, Orlando threw his daughter's bicycle into the back of the vehicle for the long ride home, McKee said, reading from the case file.
Such cases usually lead to confessions and convictions, especially when somebody comes back smelling like gas, with singed eyebrows, McKee said.