Police conducted 20 raids across the country, and arrested 17 people in a sting to bring down companies and individuals guilty of committing courtesy car insurance. Courtesy car insurance is typically committed by insurance and claims management companies, and can include a variety of tactics such as “phantom hire” contracts. This means that the courtesy car company informs insurers that they have provided a courtesy car, but does not provide one to the victim. The scam is said to have cost insurers hundreds of thousands of pounds in falsified and fraudulent claims.
Courtesy car insurance fraud may not be that well known to consumers, because it is primarily conducted by courtesy car companies against insurance companies. However, it is believed to cost the industry hundreds of thousands, or even millions of pounds, every single year, and at least some of this cost is inevitably passed on to drivers as part of increased premiums.
There are several ways that courtesy car companies may fraudulently claim money from insurance companies. Phantom hire is perhaps the most expensive. No car is provided at all, but the company bills the insurance company for a full hire. Other scams include billing for a more expensive model of car than is provided, or billing for providing the same courtesy car to two claimants at the same time. Some companies also exaggerate the length of time that a car is out with a customer. These practices are commonly referred to as credit hire fraud within the insurance and courtesy car industry.
On the morning of Wednesday 26th March, 20 warrants were executed for a number of different car hire and courtesy car companies across the country. Cash sniffer dogs were used, and computers and files seized. In some cases, arrests were also made, and a total of 17 people were arrested during the sting.
Credit hire fraud may not be as well-known as identity theft and other forms of fraud, but it is costly, and it is believed that criminal gangs set up courtesy car hire companies with the sole aim of fraudulently claiming money from insurance companies.