How to avoid being the victim of an insurance scam accident (cash for crash)

This is a very rare occurrence in New Zealand because we have ACC, but it pays to understand what happens because it’s common in some other countries (particularly eastern European countries and Russia). In fact, it’s so common in Russia that most trucks have forward-facing cameras to help prove fault in an accident. It’s called Cash for Crash (or Crash for Cash) – note that it is not a road rage incident, it’s a premeditated crash to insurance purposes.

The process is that someone decides to stage an accident using you as the unwitting participant. An example is to brake test you (brake heavily in front of you) to cause a nose-to-tail collision in order to either

1. cause damage to their vehicle (to write it off in the case of automotive insurance fraud); or
2. to pretend to have some kind of personal injury (whiplash is a frequently cited injury) in order to acquire a payout for negligent driving from you or your insurance company.

Because we have ACC in New Zealand, the second option is almost worthless – ACC pays for treatment, and they won’t be able to claim a multi-million dollar civil settlement like in the USA. They might be able to scam a benefit for a while, but they won’t be set up for life with a big payout. But for the first option – automotive insurance fraud – there are still possibilities for people to scam you. The Insurance Council of NZ doesn’t know exactly how much insurance fraud happens in New Zealand, but they estimate almost $700 million, of which this type of vehicle fraud would be a small part.

The main issue with this method of vehicle damage insurance fraud is that causing the right amount of damage is dangerous to the driver. There’s also the issue in New Zealand that we don’t have compulsory insurance so it might be that the person that the scammer picks doesn’t have insurance at all, minimising the chance of getting a payout without some level of hassle.

The most common driving situations where this will happen are:

• Brake testing, often after cutting in front of you, but sometimes at pedestrian crossings, roundabouts or traffic lights and usually where there are no witnesses.
• Motorway on-ramps where you are merging with other traffic
• Two parallel lanes turning left or right (they will drift into you and claim you cut the corner)
• Road rage situations where the person has become so angry that they become erratic and unpredictable. This isn’t premeditated like the others.

Here’s an example of how it works

How can you protect yourself?

Advanced driving techniques: use your hazard observation skills and keep a buffer. If someone cuts in front of you, increase the gap as quickly as you can. Taking advanced driver training will help.

In-car camera: a forward-facing camera will help in determining blame if someone brake tests you. If you have a rear-facing camera, too, this can help establish any manoeuvres that the other vehicle took before the event occurred.

Insurance: make sure you have comprehensive insurance that covers you in these kinds of situations.