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Report: Florida car insurance fraud tax reaches $58 per vehicle
By Insure.com staff

Florida car owners pay an annual "fraud tax" of $58 per vehicle because of criminal abuse of the state's no-fault car insurance system, according to the Insurance Information Institute (III).

As a whole, Floridians had to pay $658 million more in auto insurance premiums in 2011 because of widespread fraud, the III says. The "fraud tax" is 7 percent higher than in 2010.

Despite aggressive law enforcement and efforts by car insurance companies to crack down on fraud, crooks continue to take advantage of loopholes in the state's laws and regulations.

"Fraud is driving claims frequency and severity generally upward, forcing up the premium needed to cover expected losses," Robert Hartwig, an economist and president of III, said in a press statement.

The average cost of a no-fault auto insurance claim in Florida was $8,529 in 2011, up 28 percent from 2004, according to III's analysis.

Common examples of fraud include:
  • Padding claims.
  • Misrepresenting facts on an insurance application.
  • Submitting claims for injuries or damage that never occurred, services never rendered, or equipment never delivered.
  • Staging accidents.
So-called medical mills purport to provide health care services but are in fact created for the sole purpose of committing fraud.
No-fault auto insurance is a system that allows policyholders to recover financial losses from their own insurance company regardless of who was at fault in an accident. No-fault auto insurance is designed to facilitate quick payment for medical treatment and to reduce the number of accident disputes that go to court. But in many no-fault states, unscrupulous medical providers, unethical attorneys and others often join forces to commit fraud.
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