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Wednesday, 07 September 2016 20:59

Houston in Top 3 List of Cities with Most Auto Insurance Fraud

Houston in Top 3 List of Cities with Most Auto Insurance Fraud


HOUSTON - Texas auto insurance rates have gone up 40.5 percent in the last five years.

Consumer expert Amy Davis revealed a common white collar crime that some say is causing the increase.

L.A., New York and Houston -- you might think we're hanging with the cool crowd when you hear we all made the top three in a recent study, until you hear it was for cities with the most auto insurance fraud.

"We knew that this was a problem in Houston," Fred Lohman, with the National Insurance Crime Bureau, said.

Lohman said the fraud in our area begins at the scene of car accidents with the tow.

"The goal is to get the car to the shop," he said.

Not just any body shop. KPRC Channel 2 News found tow truck drivers steering accident victims' vehicles to body shops of the wrecker driver's choice, not the customer's.

"Did you tell the tow truck driver where you wanted him to take your car?" Davis asked Doris Babineau, who was involved in a car accident.

"No, he volunteered," she answered, talking about the tow truck driver who drove up on the scene. "'I'm gonna take it to a good place, and we'll be sure (to) guarantee that your car will be fixed,'" she said he told her.

KPRC 2 News discovered that the tow truck driver who took Babineaux's 2014 Nissan Altima to Collision King on West Tidwell was paid handsomely to do so.



We obtained an incentive sheet the body shop and storage lot owner passed around to Houston wrecker drivers, advertising that he'll pay them $600 for every car 2013 and newer they tow in. They'll get another $400 if the body shop makes repairs to the vehicle, and a $100 bonus if the wrecker driver brings the customer along to sign for the repairs. That's a $1,100 incentive for tow drivers to bring cars to his shop instead of where the car owner wants them to take it.

"Once that happens, and it gets to the body shop or the storage facility, then all the fees start mounting," Lohman told Davis. And they did. The day after Babineaux's accident, she decided to take her Altima to a Nissan dealership for repairs instead. Just to get her car from Collision King, the body shop demanded $1,619.31.

"You think $1,600 for doing no work on this vehicle and having it less than two days is fair?" Davis asked Collision King owner Allen Suleiman.

"In a sense, yes," he replied.

"In what sense is it fair for me to pay $1,600 when you did nothing to a vehicle?" Davis countered.

"Well, remember you got about $600 worth of storage fees, because the minute it comes here, you got a tow bill," he said.

But there are no towing charges listed on the bill. Instead, there is a $245 pay out fee, a $250 admin fee, a $240 preservation fee, a $250 transfer fee and a $500 steering fee.

Davis asked Suleiman what the steering fee is.

"That's when an insurance company -- when a customer wants to do business with us and the insurance company forces them to take it to their shop. That's what the steering fee is," he said.

Did you get that? The steering fee is charged to penalize the insurance company when the customer takes their vehicle somewhere else.

"It's the consumer that gets hurt on this stuff," Lohman said. "They're the ones really paying the price."

Even if you've never been in an accident, you're paying for it in your premiums.

None of the fees, not even the bounty paid to wrecker drivers for cars, are illegal. It's why Houston police and the insurance industry are asking Houston city councilmembers to regulate body shops by setting limits on fees and requiring the businesses to give customers a written estimate before any work on a vehicle is even started.

"City ordinances can certainly address the problems," Lohman said. "That's what local government should be doing in protecting its constituents."

HPD tried to get council to pass similar changes five years ago with no luck. They said they're hoping this time around they can get enough support to push it through.


We would like to thank KPRC-TV for reprint permission.

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