If you’ve ever owned a car that’s even slightly upmarket or exotic, you’ll know that insurance premiums can be a real headache. However, some owners are combating this by claiming that their vehicles – among them Porsches, Mercedes-Benzes, Audis and BMWs – are for…farm-use.
In other words, the insurance companies are being led to believe that these high priced luxury and exotic models are being used to haul bales of hay and the like and rarely leave their owner’s properties. In turn, these owners are paying as much as 20% less on their insurance premiums.
According to Quality Planning, a San Francisco-based company that investigates policyholders for the big insurance companies, has investigated 80,000 farm-use policies and found that some 8% of those vehicles were housed in non-rural areas.
This includes an Audi A4 in Brooklyn, NY and a Cadillac Seville in Los Angeles, CA. Robert U'Ren, Quality Planning’s Senior VP, explains:
"Honest people end up subsidizing the insurance premiums of dishonest people. [Claiming cars for farm-use] it is an easy tool that cheats can use to reduce the cost of auto insurance.”
Quality Planning estimates that farm-use fraudsters are shaving off some US$150 million in premiums, thanks to lax verification of farm-use claims. And it’s not just car owners; insurance brokers are in on the game too, slashing premiums by claiming farm-use to win new business.
Pete Moraga of Insurance Information Network of California explains: "Every company is different and how much time they spend validating or underwriting is different, so that it is possible that a Porsche could get through as a farm vehicle. A policy will dictate that the information provided to the insurer is true, and the policy may be void if the information is incorrect.”
Worse still, even when these people are caught out, the most they have to face is a denial of their insurance claim and an adjustment in the rate for their vehicle. It’s not even illegal, and incidents of civil actions by insurance companies against such fraudsters are very rare indeed.
It’s just one more way the bad guys win big, while everyone else loses out.
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