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Car insurance quotes are lower if you control fraud

We need to start off with a simple reminder of how insurance works. A group of people who share the same risk of loss come together and set up a fund. They all pay into the fund and if one or more of the group suffer the feared loss, the fund pays out. When there are only a small number of people in the group, the share of the loss may be quite high. But when there are many in the group, each person’s share is small. More importantly, the size of the fund grows over time so it’s better able to absorb claims when they are made. Take fire as an example. If all the merchants in a city set up an insurance fund, they only pay out if one of their number has a fire. This is not a common event so each merchant’s contribution is small. But if people want to insure against a more common risk and the claims may be quite high each time, you need a large number of people to share the risk to keep it affordable. Even then, costs may rise because of fraud. Suppose one merchant gets into financial difficulties and thinks it may be a good idea to have a fire. With only a small number of merchants in the group, everyone will be watching very carefully to ensure no fake claims. But when you have several million drivers on the road, it’s more difficult to identify fraud when it occurs.

It’s now accepted there are criminal gangs who specialize in staging accidents and making exaggerated claims. They pick busy road junctions where there will be many independent witnesses and then crash into each other or provoke an innocent driver to crash into them. The criminals all manage to sustain serious injuries that are difficult to confirm, e.g. whiplash and back injuries. Some of the best organized gangs have their own medical centers to create fake medical reports of more serious injuries. Attorneys push the claims for a share in the payouts. It’s become a very profitable business for the criminals and it’s adding several billion a year to the claims paid out. Since the insurers pass on this cost to all of us who pay premiums, we get to pay more to cover the cost of fraud.

If insurers took fraud more seriously, they could reduce the amount paid out on fake claims and pass the savings on to us in lower premium payments. Just think: lower Car insurance quotes for all if the insurers control fraud. But, as the system is currently set up, insurers have no incentive to take acton. The premium rates are still reasonably affordable and we consumers are not complaining loudly enough. No one is switching insurers to find the companies controlling fraud because none control fraud. So everyone’s car insurance quotes keep on rising and fraud is a really good business. This is capitalism at its best!

Types of Car Insurance


Insurance coverage for vehicles is as varied as the vehicles themselves. It is always best to understand the different types of insurance for your vehicle so you'll know what you will get in case you got into an accident. The law also requires that anyone who owns a car must have an insurance. The premium that you will pay largely depends on several factors like your gender, age, make and model of your car, and more.


How Does Car Insurance Work?


Car insurance is one thing that all car owners should have. While not everyone wishes that they will use it, the knowledge that insurance covers you and your vehicle for any accidents will give you peace of mind while driving. Vehicles' insurance coverage does not only include payment for the damages on the car but an assurance for your medical fees as well. Properties that are damaged by the vehicle involved in the accident are also covered. In short, insurance coverage for cars protects the owners from unwanted expenses that may be incurred should an accident happen.


Cheap Car Insurance
through Car Maintenance


Car insurance premium can really burn a serious hole in your pocket. There are, of course, ways on how you can keep your insurance premium low. The best way to do it is to properly maintain your vehicle and keep it in tip-top shape. This would ensure that your vehicle is always running at its best and will reduce the chances of accidents. In most accident cases, 5% of these incidents are caused by faulty engines or tire blowouts—situations that could have been avoided with the right car maintenance.