In Texas, it’s a serious crime to take money from an insurance company by making a bogus or inflated claim, but automobile insurance fraud happens in the Houston area a lot more than you might think. In fact, according to KPRC Channel 2 News, New York and Los Angeles are the only cities in the U.S. with more auto insurance fraud than Houston. When someone misleads an insurance company to acquire a payment that the company should not have to pay, it’s insurance fraud.

Auto insurance fraud includes more than inflating the value of auto repairs. Staging a bogus accident is a common ploy. Some people hide their cars and say they were stolen. It’s the main reason why Texas auto insurance rates have gone up more than forty percent in the last five years. KPRC consumer reporter Amy Davis recently investigated the complicated arrangements among tow truck drivers, body shops, and storage lots in the Houston area.

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Fred Lohman, Southwest Region Director of Operations for the National Insurance Crime Bureau, told KPRC that most of the auto insurance fraud in and around Houston starts when a tow truck arrives at an accident scene. When Doris Babineaux, for example was involved in a recent accident, she reports that a tow truck driver arrived and told her, “I’m gonna take it to a good place,” and that she trusted him.

HOW DO SOME BODY SHOPS IN TEXAS CHEAT CONSUMERS?

KPRC says the driver took the 2014 Nissan Altima to a body shop that pays drivers to toss business their way. That body shop reportedly pays tow truck drivers $600 for every 2013 or newer car towed in, another $400 if repairs are made, and another $100 for bringing in the owner to sign off on the repairs. That’s a lot of incentive. If you’ve just been in a serious accident and there’s no garage that you rely on routinely, a smiling tow truck driver offering help can be hard to resist.

Lohman explained to KPRC the next step in the fraud scenario. When a vehicle arrives at a body shop or storage facility, the fees start adding up immediately. In Doris Babineaux’s case, the day after her accident, she decided that she would prefer to have the repairs to her Altima done at a Nissan dealership instead. When she arrived at the body shop to pick up her car, the shop claimed that she owed over $1,600.

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What were the specifics on Ms. Babineaux’s $1600 bill? A $245 “pay out” fee, a $250 “admin” fee, a $240 “preservation” fee, a $250 “transfer” fee and a $500 “steering” fee. The steering fee is the most interesting item. It’s a fee that is charged when the customer’s insurance company requires the work to be done at another body shop. It might more appropriately be called a bullying or intimidation fee.

ARE THE FEES CHARGED BY SOME BODY SHOPS LEGAL?

The fees are legal, but innocent consumers are being victimized, and auto insurance fraud is frequently linked to these kinds of shady practices. The Houston Police Department and the insurance industry are asking Houston officials to regulate body shops, place limits on fees, and require written estimates of all costs before any repairs are started. “That’s what local government should be doing in protecting its constituents,” Lohman told KPRC.

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The television reports aired on the heels of a Houston attorney’s conviction for automobile insurance fraud. Ikechukwu Nweze pled guilty in July to engaging in organized criminal activity and automobile insurance fraud. As part of his plea bargain, Nweze agreed to surrender his law license. Jesse McClure, a special assistant district attorney for Harris County, said the investigation of Nweze began in 2013.

Houston police officers reportedly met with a Nweze associate who staged a fake car crash. Nweze was reportedly attempting to collect about $56,000 in medical costs from the insurance company for that single fake accident. Assistant D.A. McClure said, “The level of complexity in this criminal endeavor went beyond the typical staged accident scheme. They had co-conspirators at a local health clinic generating fake medical bills.”

The owner of the health clinic pled guilty in February to insurance fraud. According to McClure, automobile insurance fraud is far from a victimless crime – it means higher insurance costs for everyone. Auto insurance fraud is any act committed with the goal of fraudulently acquiring money from an automobile insurance company. Law enforcement aggressively pursues auto insurance fraud, a crime that’s been rising dramatically in recent years.

HOW PREVALENT IS AUTO INSURANCE FRAUD?

According to the Insurance Research Council about 40 percent of all automobile theft claims are bogus. The Council also reports that fraudulent claims make up approximately 40 percent of all automobile-related medical claims. Claim forms are complicated and everyone makes honest mistakes, but anyone who intentionally defrauds an automobile insurance company will face serious criminal charges and stiff penalties, including the possibility of prison, if convicted.

In the nation’s number three city for automobile insurance fraud, where does that put you if you are genuinely injured in a traffic accident – a real traffic accident – by a negligent driver? It means that you’ll need to gather some evidence to prove that you were really injured. You’ll need help from an experienced Houston personal injury attorney. But even with an experienced attorney’s help, some of the most important evidence that you’ll need will only be available to you immediately following the accident – before you can consult with an attorney.

If you’ve been injured because another driver was negligent, you’ll need to establish some facts immediately. Take photographs of the accident site, the vehicle damages, and your own injuries. If you’re injured and can’t, have someone else take photos for you. You can’t take too many. Make sure that you can prove the date of the photographs.

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Also make sure that you get the name, contact information, and insurance information from the other driver or drivers. Keep and copy every piece of paper generated by the accident – test results, doctor bills, the police accident report, and anything else that’s pertinent. Keep all of your medical appointments – they generate the medical records that a Houston personal injury attorney will need to prove that you’ve been injured – really injured – and to win compensation on your behalf.