Beware of the Scam of Fake Auto Accidents

Many think of fraud as a non-violent type of crime. In reality, vehicle insurance scams, including the staged traffic accident, are far from non-violent. Aside from costing honest consumers hundreds to thousands of dollars in added insurance premiums, this steadily growing form of fraud has resulted in countless injuries and deaths to the innocent victims of the scams.  In fact, data from the NICB (National Insurance Crime Bureau) shows that staged traffic accidents have rapidly become a leading source of insurance fraud across the U.S.

How Does It Work?

These criminally staged collisions frequently involve several suspects driving a car. The victim is the driver of another vehicle that’s being targeted by the suspects staging the collision for their own financial gain.

The suspects will most often use one of two techniques:

1. Swoop and Squat

Two or more suspects drive two different vehicles. They target an unsuspecting vehicle, most often an older model that only contains one victim. This is done so that there will not be any witnesses to the collision. The one or two suspects in the squat vehicle position their car in front of the vehicle driven by the victim. They slow to create a smaller space gap between themselves and their victim. Then, the swoop vehicle suddenly changes lanes to cut in front of the squat, thereby causing the squat vehicle to throw on breaks and stop. As a result, the innocent victim rear-ends the squat. Meanwhile, the swoop vehicle is long gone and the squat vehicle is claiming that an unknown vehicle cut them off and forced them to brake.

2. The Drive Down or Wave On

In this version, the suspect(s) are stopped at the entrance to a parking lot or an intersection. They wave on or yield the right-of-way to the victim. When the victim proceeds, the suspect intentionally accelerates to collide with the victim.

What Can Drivers Do To Reduce The Risk Of Being A Victim?

* Stay aware of your surroundings, paying close attention to what the vehicles several in front, behind, and beside you are doing and maintaining sufficient room between you and all other vehicles.

* Use caution when making a turn in front of another vehicle, even if they yield the right-of-way.

* Since suspects tend to look for innocent drivers that accidentally cross the center line and then sideswipe them, pay close attention to staying within the lines of a lane.

* After any accident, count the number of passengers and get their personal information. You may find that more people are listed on the insurance claim than actually in the accident.

* Avoid driving when you’re stressed; preoccupied with a cell phone, map, or food; or lethargic. All of these lessen the care at which you drive and your concentration abilities, thereby increasing your vulnerability.

* Have a camera in your vehicle to take photos of the scene, license plates, and the occupants of the other vehicle you have an accident with.

* Always call the police and get a copy of the police report. If the damage to the other car is minor, then ask the officer to specify this on the report, as this will make it more difficult for the other party to create more damage for a larger claim.

* Alert the authorities if you feel the accident was staged.

In closing, these staged traffic accidents often have criminal elements that reach far beyond just the suspected drivers. It’s often a criminal collaboration between unscrupulous doctors and attorneys that willingly and knowingly assist in the fraudulent insurance claim process.

What is the Difference Between Occurrence vs. Claims Made Forms?

All the property and casualty insurance policies you buy fall into one of two categories – “occurrence” or “claims-made.”   This distinction may impact drastically on:

1.      Whether or not your policy will respond to a claim;

2.      What your responsibilities will be in the event of a claim;

3.      How much your policy will cost up front and in subsequent years, and;

4.      How much it will cost to keep the coverage in effect, in the event of cancellation.

With all this riding on the type of coverage form you purchase; it helps to understand the pros and cons of each so that you can make an informed decision if options are available.

“Occurrence” form coverage is the simpler of the two.  Most property and casualty insurance policies fall into this category.  Quite simply, “occurrence” form coverage means that the policy responds to events that occur during the policy period regardless of when the claim is made.  Once the policy period is over, the policy will respond to covered claims, even if the claim is made many years after the triggering event (accident, wrongful act, injury, etc.). 

The far more complex “claims-made” coverage form responds only to claims that are made during the policy period, though the triggering event may occur prior to the policy period if there is a “retroactive date” on the policy.   The key to “claims-made” policies is maintaining continuous coverage.  Without “continuity,” insurers will not give you that all important retroactive coverage.

“Claims-made” coverage came into vogue in the sixties and seventies as professional liability policies gained a foothold and underwriters sought to contain the volatile nature of the “tail.”  In property and casualty insurance lingo the “tail” refers both to the optional coverage that may be purchased to extend the policy for reporting purposes, and to the typical length of time between the triggering event and the claim.   Asbestosis, which often takes years to develop, is considered a “long tail” exposure.  Libel and slander lawsuits, on the other hand, usually occur right after the triggering event, i.e., libelous newspaper article or news broadcast.

“Claims-made” policies are becoming more popular in commercial lines because soon after the policy year is over, actuaries will have a pretty good idea of how many more claims might be reported.  Subsequent claims, even if the triggering event occurred during that earlier policy period, will be charged to the later policy period when the claim is made.  The ability to “close out” policy years quickly, is a palpable benefit to insurers of the “claims-made” form.

How do you identify “claims-made” or “occurrence” policies?  “Claims-made” policies are easier to identify because they will typically advise you in the declarations or the first page of the policy:  “THIS IS A CLAIMS-MADE POLICY.”  Additionally, you can search for Extended Reporting Period, aka “tail” option, provisions in the form.  A space for “retroactive date” on the declarations page is another telltale sign of “claims-made.”

“Occurrence” policies are more difficult to spot.  While some policies might herald the occurrence nature of the form, in other cases it will be the lack of “claims-made” language and provisions that will provide the clues.

While “claims-made” might seem more onerous than “occurrence,” for the buyer there are some benefits that warrant mentioning.  First and foremost, there is the pricing issue.  The first year of “claims-made” coverage should typically cost somewhere between 40 and 85% of an “occurrence” policy.  The price automatically increases in subsequent years as the “claims-made” exposure increases.  Usually, after three to five years, a “claims-made” policy is thought to be roughly equivalent to an “occurrence” policy and should cost about the same.  In addition to the cost savings enjoyed early in the early years of coverage, in a competitive marketplace insureds can benefit as underwriters discount the step factors that bring up the price.  Also, although Extended Reporting Period options can be quite costly, it is rare that an insured will need to exercise such an option unless they retire or are unable to find retroactive coverage from another carrier.  Still, it’s a good idea to compare Extended Reporting Period options if you are presented with quotes from different carriers.  How long are the “tail” options and how expensive? 

While “claims-made” coverage can be confusing, it’s clear this coverage form is here to stay as the preferred choice for insurers across an increasingly broad array of product lines.  So get used to the concept now and be prepared to explore all the options carefully.

Worker Found Eligible for Compensation from Seizure Related Injury

In an August 2006 ruling, Connecticut’s Supreme Court ruled that the claimant in the case of Michael G. Blakeslee Jr. vs. Platt Brothers & Co, who was injured when co-workers tried to help during a seizure, is entitled to workers’ compensation benefits. Typically, workplace injuries caused by a seizure wouldn’t be eligible for compensation because the injuries arise from the medical condition itself and not from conditions in the work area. In the Blakeslee case, the claimant received two dislocated shoulders on February 13, 2002, when three co-workers tried to restrain him during his seizure. He had fallen near a large steel scale, and then started flailing his arms and legs as he regained consciousness.

The claimant filed a workers’ compensation claim contending that because the actual injury resulted from the restraint, and not the seizure itself, the shoulder injuries should be covered. The claimant argued that an injury received during the course of employment is eligible for compensation even if infirmity due to disease originally set in motion the final cause of the injury. The claimant also asserted that an injury inflicted by a co-employee is eligible for compensation, unless the injured employee engages in unauthorized behavior or the injury is the result of an intentional assault.

Initially, a workers’ compensation commissioner decided that Blakeslee was not entitled to workers’ compensation benefits. The commissioner determined that the claimant’s injuries resulted from a chain of events set off by a grand mal seizure unrelated to his employment. A workers’ compensation review board agreed with the finding. The review board stated that there is a prerequisite requirement for eligibility for compensation, which the claimant overlooked. The cause of the injury must arise out of the employment and work conditions must be the legal cause of the injury. The review board contended that the claimant’s seizure caused the need for first aid, which caused the injury. There was no element of the claimant’s employment involved.

Five out of seven Supreme Court justices reversed the board’s ruling. They were not persuaded by the argument posed by Platt Brothers, and the employer’s insurer, Wausau Insurance Co., that finding for the defendant would be in direct opposition to public policy because it would prevent employees from assisting co-workers in future medical emergencies. The majority noted that the co-workers restrained Blakeslee to keep him from harming other employees as well as himself. Their actions benefited the employer. The action was directly related to the employment and would therefore be eligible for compensation.

The two dissenting justices argued that the Supreme Court should not have accepted review of the case.

Workers’ Comp Claims for Mental Illness May Be Difficult to Diagnose, But Are Real in Today’s Workplace

When one thinks of workers’ compensation, images of workplace accidents and occupational diseases come to mind. Though the vast majority of workers’ compensation cases do involve claims for physical injuries and conditions, a small-but potentially growing-portion of workers’ compensation cases are based on mental or psychological claims, particularly related to stress experienced on the job.

Mental workers’ compensation cases fall into one of three categories: physical/mental, mental/physical, or mental/mental. A physical/mental claim involves a workplace physical injury that has progressed to a mental condition or disability; an example would be a back injury that lingers, and that results in the worker lapsing into clinical depression. A mental/physical claim involves a psychological condition arising out of the worker’s employment that has caused a physical illness; an example would be workplace-induced stress that causes ulcers. A mental/mental claim involves a psychological occurrence in the course of employment, which leads to a psychological injury or condition; an example would be an employee who witnesses a horrific workplace accident involving a co-worker, and who later develops a fear of operating the same equipment on which the co-worker was injured.

As with workers’ compensation claims that have only physical components, in order to be compensable, the claimed injury or condition must arise out of or occur during the course of employment. Some types of mental injuries are difficult to prove under this standard. For example, symptoms of physical ailments caused by stress (e.g., ulcers, heart attacks) may appear only after working in a stressful workplace for a long period of time. Furthermore, unlike claims based on a workplace accident, mental claims may not be linked to one particular incident, but rather to months or years of stressful working conditions.

Another example of the complexity of the cause-effect link in mental workers’ compensation claims is seen in claims based on post-traumatic stress disorder (PTSD). PTSD is a delayed psychological response to experiencing an extreme situation that overwhelms one’s usual ability to cope. Most commonly thought of in connection with soldiers and wartime, discussions of PTSD arose after the September 11 terrorist attacks. Though few would doubt the psychological impact of witnessing the devastation in New York or Washington first-hand, by definition, symptoms of PTSD do not appear for months or years after the event, making their connection to the workplace event difficult to assess.

Mental workers’ compensation claims represent a tiny percentage of all claims; estimates put claims with a mental component at about 1% of claims overall, although this figure varies by state. For a period of time in the 1980s and early 1990s, the incidence of claims with a mental component rose in some states, but stricter requirements imposed by state lawmakers, workers’ compensation boards, and courts stemmed this trend. In particular, mental/mental claims are least recognized.

Though workers’ compensation claims with a mental component represent only a small minority of claims today, the reality of the modern workplace should motivate all employers to be alert to their existence. White collar workers-who are most likely to claim an injury with a mental component-make up an ever-growing portion of the U.S. work force. Furthermore, today’s workplace puts great pressure on employees to be productive and cost-efficient. Many workers live with fear of job loss, as businesses continue to seek optimum competitiveness through “right-sizing.” All of these factors can breed stress.

All employers can take some basic steps to deal with increased stress levels in the workplace-

• Be alert to signs of stress among employees, and solicit input from employees and managers on this issue. Be aware that certain events, such as layoffs, may trigger stress levels in employees beyond what is to be expected on a day-to-day basis.

• Make employee assistance program (EAP) services available so that workers have ready access to help with dealing with stress.

• In the event of a severe workplace trauma, arrange for on-site intervention and counseling services.

Though these steps will not make a business immune from the possibility of a workers’ compensation claim with a mental component, they will, at the least, help make stress recognition and prevention part of the workplace ethic.