How to avoid claim farming scams and credit for hire risks in a car accident
- Scammers are targeting people to defraud them after a car accident
- Companies may mislead you into thinking they’re acting on your insurer’s behalf, when they’re not authorised to do so
- Only speak directly with your insurer to make a claim – not someone alleging to represent them – as they may charge you or your insurer significant and unnecessary costs
If you’re in a car accident, chances are you’ll be in a state of shock. But try to stay calm so you can think straight and assess the damage.
Once everyone’s OK, it’s time to get your ducks in a row. Contact your insurer directly, and don’t speak to anyone at the scene claiming to be representing your insurer when they’re not authorised to do so.
Claim farming is on the rise in Australia, and it could end up costing you a lot of money. The players who may be involved include claim farmers, towing companies, and credit hire providers.
What is claim farming?
Claim farming is where unauthorised companies try to take advantage of you when it comes to car claims, if you’ve been in a not at-fault car accident or your car has been damaged.1
They might mention your insurance company, tricking you into thinking they are the insurer, or an authorised representative of your insurer.
Or your details may have been passed on to the unauthorised company by another party – for example, a towing company or repairer.
These companies may offer to manage the whole claim for you.2
They may offer services like hire cars, towing, repairs, and storage – on the basis it can all be claimed back on your insurance. These services are then charged at significantly inflated prices.
The company may have even bought internet advertising for car insurance claims, displaying fake contact details that link you to the fraudulent company instead of the legitimate insurer.
What is credit hire?
Credit hire providers can form part of the claim farming process. They are companies that offer a hire car to a not at-fault driver whose car has been involved in an accident.
Tow truck drivers, who may have agreements with credit hire providers, might notify them when they arrive at the scene of the accident. The credit hire vehicle will then turn up shortly after, and paperwork with extensive terms and conditions is signed while the car owner is in a distressed state.
The credit hire provider may incentivise a chosen non-accredited repairer to take their time to work on your vehicle, so the hire car duration costs continue to rise and it’s much longer before you get your car back.3
Often, the cost the company will charge to the insurer of the at-fault driver is vastly inflated compared to market rates, increasing the cost of your claim.
If an agreement can’t be reached between the credit hire provider and the insurer of the at-fault driver, the credit hire provider may have you attend court, and, in some cases, seek to hold you responsible for the hire car costs they cannot recover.
Credit hire providers are unregulated, and you’re not protected through the Australian Financial Complaints Authority (AFCA). They may act in the interest of their profits rather than for your benefit.
Storing your car
When it comes to storing your car after it’s been towed, some of these towing providers may charge exorbitant fees, and even hold your car ransom, unless a hefty fee is paid upfront for its release.4
In some cases, tow trucks have turned up at the home of people who’ve had a minor accident and insist the insurer has instructed for the car to be towed, despite the car being in a roadworthy and drivable condition.5
The car has then effectively been stolen, and is held until the insurer, or the owner pays to release it.
The behaviours of these entities has increased the overall claims costs to the insurance industry, which could affect premiums charged to customers.
How do claim farmers and car hire companies get your details?
You may be diverted to a credit hire company at the scene of the accident, or a hire car could be brought to the scene of the accident with paperwork to be signed.
You might search for your insurance company online and call a fake company that’s claiming to act on behalf of your insurer. This can happen when these companies pay for the top ‘ad’ positions on search engines, and use an insurer’s logo on their website without approval so they can appear legitimate.6
While there are unscrupulous companies around, the industry as a whole does not support these practices. QBE’s network of repairers, tow hire, and car hire companies are chosen for their reliability and quality of their work, and we appreciate everything they do.
How do I help protect myself from fraud?
There are things you can do to make sure your car is repaired following an accident – without leaving yourself exposed.
Call your insurer straight away
Firstly, if you’re in an accident and your car isn’t driveable, call your insurance company from the scene or when it’s safe to do so, and they’ll guide you through your options.
Record all details of the accident, including the name, address and phone number of others involved, as well as details of their car. Take photos too.
- Don’t call any company that suggests it acts as an agent for your insurer. Only deal directly with your insurer.
- Your insurer’s contact details will usually be on your policy – it’s a good idea to save the number in your phone.
- Always use the insurer’s number if you have it saved or go directly to the insurer’s website. If your insurer is QBE type in qbe.com/au to find the number – 133 723
- If you need to search the internet for your insurer’s number, make sure you only use the direct number on their legitimate website. Check the URL of the website carefully.
- You can also make a claim via your insurer’s website if they offer this service. But, if you need immediate assistance, for example, your vehicle needs to be towed, call your insurer.
Don’t let anyone take your car unless you’re sure they’re authorised to do so
Make sure anyone who wants to take your car away holds relevant state authorisation with the consent of your insurer.
- If your car needs to be towed after an accident, call your insurer – they’ll be able to organise a tow or recommend next steps.
- Don’t sign any towing agreements unless you’re certain the provider is legitimate. Regulations differ from state to state. In NSW, for example, a NSW Fair Trading Towing Authorisation form has to be issued before your vehicle is towed7, and a green towing notice sticker attached to the vehicle.8 There are limits on how much the towing company can charge for towing and storage.
- Unfortunately, not all states have towing regulations, so it’s best you contact your insurer for guidance on how to move your vehicle.
- Don’t sign any contracts for a hire car unless it’s after talking with your insurer.9
- If you feel at all uncertain, uncomfortable, or pressured into signing a contract and accepting a tow, call the police.
What should I do if a company turns up at my house?
Some towing providers visit the homes of people who’ve been in an accident, to tow their car away. Be wary of these companies pretending to be authorised by the insurer.
Once they have the car, it could be held until you or the insurer pays for its release. This can delay the time it takes to have your claim processed or car repaired.
If a tow company turns up at your home and wants to take your car away for repair, call your insurer to validate the company is genuine and has the relevant authority to do so.
Only authorise repairs after speaking with your insurance company
Many insurers have a panel of authorised repairers, who are chosen for their reliability. Speak with your insurer before authorising any repairs.
Be wary of unsolicited phone calls
If you get a call from anyone offering any help or services related to your car accident, be cautious. If the caller says they’re acting on behalf of your insurance company, take their name, the reason for their call, and a reference number. Don’t reveal any personal information.
You should also ask the caller to identify themselves – get them to tell you your policy number and claim number.
If you’re unsure, hang up, then call your insurance company on the number listed on your policy to confirm it was a legitimate call. If so, they’ll be able to reconnect you. Ask your insurer for guidance on next steps.
What if I need to hire a car after an accident?
If you are in an accident, speak with your insurance company, or the insurer of the at-fault driver to arrange a hire car.
What should I do if I’ve been misled?
Although claim farming cases are rare, fraudulent companies are around. If you believe something’s not quite right after an accident, call your insurer immediately. They’ll be able to advise you on the next course of action.
To decide if the product is right for you, please read the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD).
1 Interview with QBE spokesperson, March 2024.
2 Interview with QBE spokesperson, March 2024.
3 Interview with QBE spokesperson, March 2024.
4 Interview with QBE spokesperson, March 2024.
5 How an insurance ‘claim farmer’ towed Annette’s car away and charged thousands to return it – ABC News
6 How an insurance ‘claim farmer’ towed Annette’s car away and charged thousands to return it – ABC News
7 Tow truck driver information | NSW Fair Trading
8 Tow truck driver information | NSW Fair Trading
9 How an insurance ‘claim farmer’ towed Annette’s car away and charged thousands to return it – ABC News
