As a New Yorker, you ante up the second-highest auto insurance rates in the country, behind only drivers in New Jersey. In 2001 alone, insurance companies raised the typical New York City motorist’s premium 25 percent.

There are many complex reasons for your stratospheric auto insurance bill, but one of the biggest is fraud. The New York Alliance of Insurers, the trade group representing insurance companies, calls this state “the fraud capital of the nation.” The group estimates that auto insurance fraud costs New Yorkers $700 million annually and that fraudulent claims tack $124 onto the typical premium every year.

Insurance companies aren’t the only ones saying that the situation is going from bad to worse. The New York Insurance Fraud Bureau, the law enforcement arm responsible for investigating these crimes, recorded a 7 percent rise in fraud complaints through the first three quarters of 2002.

Bogus claims and so-called “paper accidents” hike rates for all policy-holders. Certain schemes, such as staged accidents, may involve you directly as a dupe. With so many crooks out there, how can you protect yourself from becoming a victim? Here’s how to avoid common ploys:

The Swoop & Squat. This scam requires two vehicles in cahoots. You’re cruising down a busy city thoroughfare, following one car—call it “Car A”—perhaps a bit too closely. Suddenly, a second car (Car B) passes you both, “swoops” in front of Car A, and brakes. Car A immediately “squats,” or slams on the brakes. You can’t help but rear-end it. Car B drives off, and Car A’s driver—and all of his passengers—later file personal injury claims against your insurance company.

“One of the tip-offs is that the ‘squat car’ has three or four people in it, all of whom claim to be injured,” says Ed Sparkman of the National Insurance Crime Bureau (NICB). “It’s true with any staged accident. The more people who claim to be hurt, the more potentially lucrative the scam.”

Your Defense: The swoop and squat gives you just one more good reason not to tailgate. Following the “two-second rule” not only keeps you safe in everyday circumstances, but also makes you less attractive as a dupe in a fraud scheme. As the car in front of you passes a stationary object or fixed mark on the road, begin counting, “one thousand one, one thousand two.” If you reach “one thousand two” before your car reaches the reference point, then you have a safe cushion of space under normal conditions.

Also, always look beyond the car immediately in front of you, watching for brake lights farther ahead. That helps you anticipate slowdowns or stoppages. Slow as the traffic stream slows, not just when the car in front of you does.

• The Drive-Down. You’re exiting a parking lot or merging with traffic on an entrance ramp. An apparently courteous driver waves you ahead. When you pull out, he hits you intentionally and later files a claim, denying ever waving you on.

Your Defense: “Again, seeing four or five people in the car should be a red flag,” says NICB’s Sparkman. But under any circumstances, good driving dictates that you be wary of taking a right-of-way not yours under the rules of the road.

• The Sideswipe. You’re turning at an intersection with dual turn lanes—two side-by-side lanes allowing different traffic streams to turn simultaneously in the same direction. While making the turn, you drift a bit into the adjacent lane. The fraud artist intentionally slows down or speeds up so that you strike the side of his car.

Your Defense: Check your mirror before beginning the turn, and be aware of vehicles in the adjacent lanes. To stay in your lane while turning, look “through” the turn—that is, keep your eyes on the center of the lane along your intended path of travel. This technique helps to keep you from drifting, because you always tend to steer where you look.

After an Accident

The defensive techniques described above can protect you from non-fraudulent collisions as well as scam artists. The following post-accident tips also apply in either case:

• Count noses and take names. Besides exchanging names, addresses, phone numbers, and license numbers with the other driver, notice how many people are in the other car. Try to get their names, contact information, and driver’s license numbers, too. According to NICB, frauds often involve more claimants that were actually in the car at the time of the collision.
• File a police report. New York law requires you to call the police to the scene only if injuries are involved or property damage exceeds $1,000. “In a minor accident, it’s your call on how to proceed,” says NICB’s Sparkman. “But if you’re at all suspicious, it’s best to file a police report.”
• Document the scene. If possible, get the names, addresses and phone numbers of witnesses. NICB also recommends carrying a disposable camera to photograph the scene.

“Sometimes snapping pictures is difficult”—fraud perpetrators will resist having their pictures taken—“but think of it as safeguarding your interests,” says Sparkman.

Finally, if you suspect that you’re a dupe in a fraud scheme, report your suspicions to the New York Insurance Fraud Bureau (888/FRAUDNY, or 888/372-8369).