Why Car Insurance Write-offs Increase with Recessions

Since the start of the current recession there has been an abnormal increase in the number or write-offs and accidents that lead to write-offs. These incidences seem to only happen during times of recession and economic instability. For many years statisticians have often noticed this trend but often wonder what the gelling factor is that combines these two very separate events together.

The thing is that this correlation between the write-off and amount of accidents happening makes no statistical or even logical sense if you look at it purely at the surface. There simply isn't anything physical that can link the two occurrences together. If you want to know the real reason behind this, you have to look further away from the surface of things and understand the nature of our fellow men that are put in a tight financial bind.

The fact is that many people who are in financial difficulties will turn to insurance fraud to get themselves out of trouble. Some of these unscrupulous people will actively do damage on their own cars in the hope that their car insurance providers will cover their losses. Although it is a very despicable act, the problem of proving that these people have actually actively tried to deceive the insurance companies is difficult at best.

There are a number of desperate motorist that actively get themselves into accidents by ramming their cars into other cars or even stationary things like fire hydrants in the hopes that they will inflict enough damage on the car so that the insurance companies will be forced to write-off the car and issue the individual a settlement check for the car's value. The sad fact is that most of these people do not properly think through these actions and end up on the losing end of the battle.

Some other individuals have even resorted to torching their cars or even reporting that it was stolen simply to get their car insurance claims come through better. These criminal acts are very obviously against the law and if even the slightest issue arises the insurance company is simply not going to pay your claims. There simply is no situation where you should ever be resorting to insurance fraud to either get a cash benefit or to get rid of you car.

Often times, if you find that either financing your car or paying you car insurance is simply too much for you to handle for the moment then you should simply get rid of the car the legitimate way, sell it! If the car is under finance then you can slowly pay back the remaining of the loan and even restructure it to fit your cash flow requirements if needed. Never resort to crimes such as making false car insurance claims just to get your help your cash flow or get rid your car. The risks are simply too large for the potential pay-off.

Although you may not think that this affects you as an honest car insurance holder, it actually does. Insurance companies do not have the ability to define who is likely to conduct insurance fraud and who isn't. Instead they will simply raise the risk profiles for all their customers so that they will not see a loss should it happen. The end result is that premium rates for all customers will be increased. There is no way to get around this as every insurer will cover themselves against this risk. Basically every policyholder will effectively be penalized for the action of a few irresponsible few.

Although authorities and insurance companies want to keep this to a bare minimum it really is hard to prove that insurance claims are fraudulent. For most of us other car insurance policy holders we will just need to understand that our rates are increasing simply because of these activities and plan accordingly. There is nothing else we can do except to accept it and understand that we aren't the only people that are penalized, everyone is getting it.