Auto insurance fraud is on the rise in California, the California Department of Insurance (CDI) Commissioner said Tuesday. The reason for the uptick in auto insurance fraud in the Golden State: the down economy.

CDI has recently complied statistics showing that scam artists are cashing in on auto insurance money. The number of auto arsons and suspected car theft fraud cases went up in 2008.

“Department of Insurance investigators have seen an increase in suspected automobile arson and theft fraud cases recently,” said Commissioner Steve Poizner. “Our enforcement experts are working hard to crack down on anyone attempting to skirt the law for financial gain.”

The CDI reported a 25% increase in suspected vehicle arson fraud cases in 2008 compared to 2007. They also received approximately 200 more suspected vehicle theft fraud case referrals in 2008 than in 2007.

“Many Californians are facing a host of financial challenges in today’s economy, but I want to remind everybody that you will only compound your problems if you break the law and commit fraud in search of a quick fix,” said Commissioner Poizner.

Auto insurance fraud has a direct affect on car insurance rates. The money spent by insurance companies to cover the costs of fraud gets passed on to consumers in the form of higher car insurance rates. The Coalition Against Insurance Fraud estimates that insurance fraud costs at least $80 billion each year, or almost $950 per family, in higher car insurance rates.

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