Since owners of farm vehicles get huge discounts on insurance premiums, some commit insurance fraud as they claim that their Porsche Carrera, Mercedes SL550 and BMW Z4 are being used exclusively on a farm.
This is the assessment of Quality Planning, a company based in San Francisco that verifies policyholder data for auto insurance companies. The chances of a farm vehicle colliding or getting stolen are lower than those used in urban areas.
Hence, auto insurers offer farm-use discounts of as high as 20%. Quality Planning examined 80,000 vehicles that were given a farm-use insurance discount in 2010.
Geocoding was used to see if the address where the cars were housed was an urban or rural area and if active farming is taking place there.
According to U.S. census data, around 8%, or 6,382 vehicles, were found in ZIP Codes that had less than 1% engaging in agriculture. For example, an Audi A4 was categorized as a farm vehicle in Brooklyn, N.Y. Doing so meant that the owner saved as much as $389 in his annual insurance.
They also found a Cadillac Seville in Los Angeles that was claimed to be used in the farm. The owner got annual savings of only $61. Robert U'Ren, senior vice president of Quality Planning, said that as a result, honest people get to subsidize the insurance premiums of the dishonest ones.