Car Insurance Fraud: 5 Common Examples in Malaysia

Car Insurance Fraud: 5 Common Examples in Malaysia


Car insurance fraud is neither new nor unfamiliar to many of us, but it is truly far more discomforting than Malaysians realise.

Did you know that in April 2018 alone, a total of 16 people were detained for car insurance frauds amounting to a whopping RM2.9 million — and six of them were police officers?

Yes, fraud cases can involve very intimidating personalities. They can also be difficult to spot, and you could even be committing them without realising it. All these concerns should make you wonder if you’re knowledgeable enough to know how to deal with such a situation should it arise.

Make no mistake, the Bear has a few tips for you to stay on the safe side and out of harm’s way. Here’s a few common scenarios you need to be wary of.


5 car insurance fraud scams you may have come across

1. The tow truck scam

If you’re involved in an accident, and a tow truck shows up just minutes after, do not agree to use the services being offered to you — even if they’re pressuring you or blaming you for causing a congestion. In times of distress, it’s easy to just accept the situation and let someone else take over. But you shouldn’t!


Tow truck
It's easy to fall for such a tow truck scam especially in times of duress, a good car insurance provider can prevent this with quick accident assistance 


They’re likely to be part of a scam in which you will have to pay exorbitant towing fees, followed by massive repair costs as your vehicle will be taken to a workshop that is in cahoots with those providing the towing service.

All of these payments will set you back financially far more than they actually should, and you most probably won’t be able to claim compensation from your car insurance provider for them. Not without inducing your provider’s suspicion that you’re trying to scam them, anyway.

WHAT YOU CAN DO: Call your vehicle’s insurer as soon as the accident happens.

Once they’ve finalised the details of the tow truck and drivers who will be escorting your vehicle — usually for free, courtesy of your motor insurance policy — to an insurance-approved workshop, wait for that truck to arrive.

The Bear has been told that if you are an Allianz car insurance policy holder, their Road Rangers will swoop in to save you once you alert them of your accident. The Allianz Road Ranger will know the procedures involved and take care of all necessary procedures such as arranging for a panel tow truck (and sending those pesky ones away), and then escorting you to the nearest police station to file a police report if required.    

2. Staged accidents

Staged accidents are probably the easiest insurance fraud mechanism that you can be involved in without knowing so.

It’s a fairly simple scheme: an attacker (A), who often has a car that is already damaged, waits in hiding and aims to collide slightly with a targeted driver (T). Upon collision, A claims that the “extensive damages” suffered by his vehicle were caused by T, and demands that T pays for these damages from his or her own pocket or through an insurance policy.


Angry man at smashed car
Were there suspicions that the accident was staged? Alert the authorities and let them investigate 


Other variations include leaving pieces of glass, nails and oil trails on roads, which would either damage your tires or make them incredibly slippery, leading to a collision. This is then followed by ‘the tow truck scam’ mentioned above.

WHAT YOU CAN DO: Aside from always being aware of your surroundings, invest in a dashboard camera and rear view camera to be placed in your vehicle.

This will allow you to keep track of approaching vehicles at all times, even when you aren’t necessarily looking at a specific part of your car. They’re available for as little as RM25 only.

3. Car theft fraud

This insurance fraud ploy is more difficult to detect, given that it usually happens away from public eyes, but it’s worth being aware of nonetheless.


Adjusting rear view mirror
Be careful and stay alert of car jackers and incidents of car thefts


A party files a police report regarding a stolen car or a vehicle having been broken into, and uses this report to support a car insurance claim from its insurer. This usually requires the fraudulent party to work together with members of the authority — which may sound like an impossible thing, but is actually a very real occurrence.

The vehicle that was reported as stolen is then given a new registration number and an entirely different identity, thus allowing it to be resold in the car market for additional profits.

WHAT YOU CAN DO: If your car has been stolen or broken into, inform your insurance policy provider about the incident immediately.

Keep in mind that you should be filing a police report on your own. Do not allow anyone else to make the police report for you, and do not lodge your report in the company of unfamiliar parties, even if they are claiming to help.

4. Overstating loss in claim

This may seem like a fairly reasonable thing to do when making a car insurance claim. After all, the damages to your car will set you back greatly in terms of time and other miscellaneous costs, so why not include them in the amount of compensation you’re requesting from your insurer?

Unfortunately, overstating the amount of your loss in an insurance claim constitutes insurance fraud, even if you are able to convince the mechanic who repairs your car to work with you on this mission.


Car insurance claim form
Honesty is the best policy, so don't try to claim more than you are entitled to!


Keep in mind that your insurer is well-versed in the damages faced by vehicles, so they will easily see through your attempt to gain more. Don’t let greed get the better of you!

WHAT YOU CAN DO: Be upfront and precise with the amount of your claim.

If your mechanic estimates that your vehicle’s damages warrant a compensation of RM1,500, then state that exact amount as your requested compensation in your car insurance claim — and be very specific with the reasoning behind this amount, as vagueness and ambiguity can lead to your claim being rejected.

5. Claiming under a different driver

Here’s a reminder that details do indeed matter — despite the beloved Malaysian motto and practice of “Just cincai do lah!”.

Let’s say your vehicle was involved in an accident while being driven by one of your friends. This friend isn’t a Named Driver in your motor insurance policy, which means he or she is not recognised as a regular user of your vehicle by your policy.


Driver on phone
Who's the actual driver behind the scene of the accident?


As you’re aware that any motor insurance claim you make for this accident will suffer a deduction — usually around RM400 — due to the fact that your car was not being driven by a Named Driver during the accident, you decide to list yourself as the responsible driver in your claim instead.

Sounds like a simple recipe for a hiccup-free car insurance claim, right?

Think again. If your insurer discovers that you basically faked the identity of the driver in your claim, your policy may be cancelled entirely by your insurer as a safety precaution against the possibility of fraud — and legal actions can be taken against you for submitting fraudulent claims.

WHAT YOU CAN DO: Be precise and honest when submitting motor insurance claims.

Remember that your insurer will investigate all claims you make, and if it is found that some of the details in your claims were falsified, the consequences can be dire.

You should also list all regular users of your vehicle as its Named Drivers. Most policy providers allow you to include up to two Named Drivers per policy for free, but you can add more names for only RM10 per name.



There you go! Five things you can do, look out for, or wholly avoid to prevent yourself from courting trouble in the form of a car insurance fraud case. It also helps to remember that fraud is a criminal offence in Malaysia — and that according to Section 120B of the Penal Code, any conspiracy to commit a criminal act will be rewarded a minimum punishment of imprisonment for six months.

Concurrently, if you suspect that someone or a party is attempting to commit any sort of insurance fraud, report your suspicions to Persatuan Insurans Am Malaysia (PIAM) at 1-300-22-11-88.

Need more information on the proper way to handle car insurance claims? Let the Bear treat you to some good quality honey and find out how to file your car insurance claims like a champ!