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Take care to watch for accident damage overcharging
Aug 14th 2012 at 10:37 AM
by Cornelius Nunev
Every person must get car insurance but nobody ever wants to have to use it. However, if one does get in a crash, watch for collision damage overcharging, which can add hundreds of dollars to the bill and boost the premiums even more.
Keep an eye on estimates to prevent crash damage overcharging
When you get your car repaired after a car accident, which was already hard in the first place, you have to watch out for crash overcharging. The repair shop will give an estimate for the damage, but they can just as very easily come back later with a higher price. It is just an estimate at first.
Sometimes it is legitimate when the damage in the car seems worse than the original inspection expected, so not all repair shops are just attempting to steal your money. Some of them, however, are attempting to cheat you, according to Edmunds. They will sometimes lowball the estimate to get the repair approved just to increase the price in the final bill. That means the consumer ends up having to replace the rest.
Accused party with rental car corporations
One of the most commonly-accused parties in crash repair overcharging is rental car corporations. Over the years, numerous rental agencies have been accused of drastically charging up to twice the amount a repair would cost if a rental car is damaged. In 1988, according to the New York Times, Hertz was caught charging customers more than double the cost of repairs to fix cars damaged in crashes, netting $13 million over many years from the scheme.
There was one male in 2010 who was on his honeymoon while driving a Ford Mustang. During the trip, the car broke down and he was given a replacement rental. There were no accidents at the time. Still, the Chicago Tribune column explained that the man was charged for a front grille, bumper and new radiator.
According to the Telegraph, there are "credit hire" services in the U.K. that are responsible for helping people get rentals and car repairs after accidents. They make about 200 million pounds a year, or $310 million a year, from customers getting overcharged for the services.
A form of insurance fraud
Officially, it is fraud to try and get more money out of an insurance business or consumer by overcharging for a repair, and legally it is a problem. The National Insurance Crime Bureau estimates that about $300 extra per year per policy is added by Insurance companies to cover fraud. According to the Texas Department of Insurance, it is certainly fraud to exaggerate damage claims like that, which is not okay with the law.
According to the NICB, about $120 billion is lost every year to insurance fraud. About 10 percent of claims are fraudulent also.
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