The frequency of excess claims for automobile personal injuries

by Allan Abrahamse, Stephen J. Carroll

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Over the past 15 years, automobile insurance premiums, particularly for personal injury coverage, have grown rapidly across the country. Stiff increases in insurance premiums are burdensome for everyone. High insurance premiums, especially problematic for low-income populations, are an incentive to drive uninsured, exacerbating the uninsured motorist problem. Debates over auto insurance costs generally feature clashing perspectives, but nearly everyone agrees that when insurance companies pay compensation for nonexistent injuries, the costs are reflected in higher insurance bills for everyone. But how much excess claiming is there? This study analyzes the patterns of personal injury claims submitted across the states to estimate the extent of "excess claiming," claims for alleged injuries that are either nonexistent or unrelated to the accident. The study confirms the well-known assertion that the United States tort liability system provides incentives to submit excess claims for auto injuries, and provides empirically based estimates of how much excess claiming exists.

Originally published in: Automobile Insurance: Road Safety, New Drivers, Risks, Insurance Fraud and Regulation, Georges Dionne, Claire Laberge-Nadeau, eds., Boston, Mass.: Kluwer, 1999, Chapter 7, pp. 131-149.

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