Stolen car fraud is driving up insurance costs for everyone According to the National Insurnace Crime Bureau, how many vehicles were reported stolen in the United States in 1997? A. 70,000 B. 120,000 C. 590,000 D. 1.3 million E. 2.9 million If you'd like to know more vehicle theft facts, click here VIDEO CNN's Ed Garsten interviews experts on insurance fraud Windows Media 28K 80K

August 13, 1999
Web posted at: 9:16 p.m. EDT (0116 GMT)

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DEARBORN, Michigan (CNN) -- Why would someone set fire to a car they leased and then report it stolen? If you smell a scam, you're right. And it's just one of many frauds that drive up the cost of insurance coverage for everyone.

Police say it's not unusual for motorists nearing the end of a lease contract to find they're over the mileage limit and owe several thousand dollars in additional costs. It's an expense that can disappear, if the lessee has arson on his mind.

If the scheme works, the vehicle is reported stolen, it's later discovered as a burned-out heap and the insurance company pays to replace it.

"One of the quickest ways to get rid of the lease payment is to get rid of your car," North Carolina police investigator David Holland told the Charlotte Observer.

While there are no figures on how many leased cars are intentionally torched, the National Insurance Crime Bureau estimates 10-15 percent of the vehicles reported stolen are actually frauds.

The combination of legitimate theft reports and fraudulent ones is sticking drivers with higher premiums, says Don VanHoutte, an investigator for State Farm Insurance.

VanHoutte was among hundreds of insurance and law enforcement personnel at this week's convention of the International Association of Auto Theft Investigators, held in Dearborn, Michigan.

The annual meetings are where people who fight insurance fraud come to share what they know about the latest trends, scams and techniques used by auto thieves.

That includes torching vehicles -- on purpose -- to demonstrate the difference between a car engine fire and an interior fire.

Experts say that engine fire arson is more likely to occur when a thief wants to destroy evidence, such as the vehicle identification number (VIN), in hopes that the vehicle can't be traced.

In contrast, an interior fire might occur when the vehicle is leased and the arsonist wants the VIN to be visible for insurance purposes.

William Fisher of Nationwide Insurance witnessed the vehicle burning demonstration and called it educational. "I haven't had the opportunity to see something like this before," he told the Detroit News.

At this point, though, police say there's no foolproof way to prevent insurance companies, or honest drivers, from being burned by fraud.

Detroit Bureau Chief Ed Garsten contributed to this report, written by Jim Morris

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