NU Online News Service, May 27, 10:30 a.m. EDT
There are probably no farms in Brooklyn, N.Y., and it is unlikely a Jaguar is being used to haul animal feed.
A new study reveals many vehicle owners claiming a discount for farm use are giving insurers a load of horse manure.
Cars clearly not meant for farm duties and owned by people living in urban areas are fraudulently getting farm-use discounts of up to 20 percent offered by many insurance companies, according to Quality Planning.
A subsidiary of Verisk Analytics that verifies policyholder data for insurers, Quality Planning looked at about 80,000 vehicles getting a farm-use discount in 2010 and used geocoding to determine if owners lived in urban or rural areas, and if there was farming in the vicinity.
What the San Francisco-based company found was that about 8 percent of cars getting the discount where garaged in places not engaged in agriculture. Makes of cars receiving the savings—meant for vehicles used exclusively on a farm—included BMW, Cadillac, Jaguar, Mercedes and Porsche.
“In some cases the type of vehicle employed…would seem rather unsuitable for farming,” Quality Planning says.
The fraud is costing insurers about $150 million each year, concludes Robert U’Ren, senior vice president of Quality Planning.
“Misapplication of the farm-use discount is one of a number of frauds perpetrated on insurance companies by dishonest policyholders and their agents,” says U’Ren in a statement.
Claiming farm-use is basically done on the honor system. The use is seldom verified, so it is an easy way to cheat an auto insurer, says Quality Planning.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.