Car Insurance Referral Fraud

Scams affiliated with car insurance can take many different forms, and they all can cost you a lot of money. All policyholders end up shelling out lots of money for overly priced or improper payments associated with an insurance claim. This means that you end up forking over big money to satisfy somebody else’s greed. By being an educated consumer, you can help minimize these scams and help to keep car insurance premiums from rising through the roof. In this article, we will provide tips on how to avoid car insurance referral scams and also help get rid of them.

How do car insurance referral scams work?

A tow truck driver may be paid a finder’s fee by a lawyer to refer personal injury car accident victims to them. This is illegal. A lawyer may be on the payroll of a health care provider to refer personal injury accident victims to them, and this also is illegal. A tow truck driver may be paid a finder’s fee by an auto body repair shop to have damaged cars brought there. This too is a crime. In the insurance business, these tow truck drivers are called “chasers.” It may be unlawful for a tow truck operator to refer an accident victim to a particular repair shop without being asked and especially if they receive a finder’s fee for making the referral.

Many auto body repair shops control or own “chasers.” It is up to the insurance companies to choose not to do business with these shops. If the insurance company does not recognize the shop to where your car has been towed, your car may need to be taken to another auto body repair shop. Before this occurs, you may need to pay for the towing fee, storage, and perhaps other administrative fees. These fees can add up to the thousands of dollars, and your auto insurance may not cover everything. If you do not wish to pay up, the auto body repair shop can detain your vehicle in accordance with state laws and charge you storage and towing fees, and place a lien on your car and sell it to recover their fees. To recover these referral fees, lawyers, tow truck operators, doctors and hospitals, and auto body repair shops will most likely inflate their bills. Ultimately, it is you, the policyholder that ends up paying through the wazoo.

What can you do to combat auto insurance scams?

Be well informed and educated. If you need the services of a personal injury lawyer, tow truck operator, or doctor, know everything there is to know about your rights as an accident victim. Here is some of advice:

Tow Truck

  1. Ensure that the tow truck service has a legal license to operate before you hire their service.
  2. Check to see if the tow truck service is associated with a reputable company such as Triple A (AAA) or other automobile organization.
  3. Check to see if the tow truck service has a contract with local, county, or state law enforcement agencies.
  4. Listen for obvious red flags. Does the driver recommend a particular repair shop without being asked? If he does, this might indicate that he has a financial interest in that repair shop.
  5. Be sure to read the fine print on the contract or service invoice that the tow truck driver asks you to sign.
  6. Ask the driver to take your car to a secure location where the insurance adjuster or appraiser from your auto insurance company can assess the damages.
  7. Call your auto insurance company right away for information on towing services and where to take your car to be repaired.
  8. Look into having your car towed to a preferred auto body repair shop. Some auto insurance companies use preferred repair shops where they have a mutual agreement that guarantees that your car will be fixed to the highest possible standards. For more information, call your auto insurance company.

Who can I call to report auto insurance fraud?

If you believe you are a victim of auto insurance fraud, report the incident to your state’s insurance commissioner.


  1. Ensure that the lawyer to whom you are referred is licensed to practice law in your state.
  2. Ask them up front what their rates are and what their payment plan is for your situation and how it will benefit you if you hire their service.
  3. Check with your state’s bar association for any complaints about them.

Health Care Providers

  1. Ask if they are licensed to practice as a health care professional in your state.
  2. Ask how much they charge for their services and if they will accept payment from your health or auto insurance companies and not charge any more fees beyond that.
  3. Check with the health care provider’s state licensing board to see if there have been any complaints lodged against them.

There are many forms of consumer fraud going on nowadays. It is up to you to educate yourself on what is or is not legitimate. Hopefully, our advice will minimize your chances of becoming a victim of auto insurance referral fraud.