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Crash-for-cash cheats hit innocent drivers

Press release: 11/02/2011

New research from car insurer LV= reveals that staged car accidents are at a record high[1]. In research amongst motorists involved in a car accident[2], over one in 20 (6%) believe they have been a victim of a 'crash for cash' staged accident in the past two years. This is more than double the number reported in the two years previous to this[3].

Fraudulent 'crash for cash' accidents are defined as one or more individuals involving themselves willingly in a road accident for financial gain - most often claiming for injuries such as whiplash, with additional payouts to compensate for lost earnings at work.

Birmingham is the UK's 'crash for cash' fraud hot spot, followed by Liverpool, Manchester, East London and Bradford[4]. According to claims experts, older cars are often used by fraudsters as they are cheap to buy and more likely to be written off, even if the resulting damage is minimal.

According to the LV= research one of the most common 'crash for cash' scams is 'rear-ending', where a fraudster sharply brakes, causing the driver behind to unavoidably hit them. Often the fraudsters disconnect their brake lights so the motorist behind has no idea that they are slowing down. In rear-end shunt incidents the driver behind is almost always held to blame.

Victims of staged accidents report that other popular methods used by fraudsters include signalling another driver to merge into traffic and then crashing into their vehicle (24%), or 'side-swiping' other cars (17%). These types of accidents are hard to prove blame against one side or the other, allowing criminals to make an dishonest claim.

Furthermore, many innocent motorists believe they have been victims of unscrupulous drivers who have exaggerated the circumstances of a genuine accident in order to take advantage of the situation and gain financially.

In research amongst motorists who have been involved in a car accident in the last five years, a quarter (24%) said they had been in a situation whereby someone had exaggerated a claim for financial gain.

Of the victims who were involved in one of these scenarios, over a third (37%) say the other driver made a personal injury claim when they were clearly unharmed, nearly a quarter (23%) reported that the other driver claimed for vehicle damage that pre-dated the accident and a similar number (22%) said they were wrongly blamed for the accident after the other party lied about the circumstances. One in 20 (5%) victims said the other driver even lied that they had a passenger, who then claimed compensation, when actually they were driving alone.

Over a third (37%) of motorists involved in suspected staged accidents[5] ended up paying out at least £2,000 through their insurance. Fraudulent personal injury claims are the number one reason for recent increases in car insurance costs with around 50% of all claims costs now attributable to personal injury payouts.

As a result the insurance industry is clamping down on fraudsters and pushing heavily for custodial sentences against anyone who attempts to make an invalid claim. Being convicted of fraudulently making or exaggerating an insurance claim now carries a potential sentence of five years or more.

In addition, insurers are working closely with the medical profession to scrutinise personal injury claims. Almost four in ten (39%)[6] GPs have refused to write a letter or sign a medical form for a personal injury claim because they did not believe the claim was valid.

Any motorist can become a victim of a fraudster but lone motorists are particularly vulnerable as it's harder for them to prove the circumstances of the accident if they are misreported.

Ursula Coulibaly, head of financial crime operations at LV=, said: "It's worrying that criminals and corrupt motorists think it's acceptable to try and manipulate innocent motorists in this way. Not only is this practice dangerous, it is also illegal and leads to higher insurance premiums for all drivers. We'd urge motorists to pay close attention to their surroundings in the event of an accident and ensure they document as much information as they can. Any suspicious behaviour, such as the perpetrator being quick to apportion blame, or demanding cash up front at the scene, should be reported to your insurer straight away."

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All research unless otherwise stated was carried out by research agency, company partner of the Market Research Society. PCP Research. Fieldwork took place online between 7 - 24 January 2011. PCP interviewed a sample of 3,362 UK drivers, 1,000 of whom had been involved in a car accident whilst driving in the past five years.

  1. According to the LV= research, 36% of drivers questioned who had been involved in an accident they suspect to have been staged within the last five years stated that the accident took place in the past year, compared to 33% between one and two years ago, and a higher percentage than any year previous to this.

  2. Drivers who have been involved in an accident in the past five years.

  3. According to the LV= research, 69% of drivers involved in a suspected staged accident within the last 5 years reported that the accident took place in the past two years. In the two years previous to this, 29% of accident victims reported a suspected staged accident taking place. This is an increase of 40 percentage points, equivalent to more than double the number reported between 2-4 years ago.

  4. According to IFB data.

  5. In the last five years.

  6. According to research amongst GPs, conducted by research agency PCP, company partner of the Market Research Society. PCP questioned a sample of 250 GPs between 10 - 17 November about their experiences of personal injury claims.

About LV=

LV= is a registered trademark of Liverpool Victoria Friendly Society Limited (LVFS) and a trading style of the Liverpool Victoria group of companies.

LV= employs around 4,000 people, serves over four million customers and members, and manages around £7.9bn (as at 30 September 2010) on their behalf, via LV= Asset Management (LVAM). We are also the UK's largest friendly society and a leading mutual financial services provider.

LVFS is authorised and regulated by the Financial Services Authority, register number 110035. LVFS is a member of the ABI, the AFM and ILAG. Registered address: County Gates, Bournemouth BH1 2NF.