One Armed Bandits

According to the FBI, insurance companies collect over $1 trillion in premiums each year. And, also according to the FBI, insurance fraud costs the industry $40 billion annually, causing premiums to increase between $400 and $700 per household. But don’t tell that to the people of Vernon, Florida.

Vernon is a small town on Florida’s panhandle, not too far from Alabama and Georgia. Its population bounces between 500 and 800, and recently has been rather poor, with one quarter of the population at or below the poverty line. It’s been that way for generations. In the 1950s and 1960s, however, some of the people found a way out of poverty — via a handsome insurance settlement. And it would not cost them an arm and a leg. Just one of the two.

Quite literally, people in Vernon were shooting themselves, blowing off a limb, and collecting on the insurance. How the trend started, no one knows — perhaps it was an accident at a sawmill or with a plow, or perhaps it was a calculated effort to scam an insurance company out of tens of thousands of dollars (or more). Truly, it doesn’t matter. For when word got out that so-and-so just received a check for untold riches — and all it cost him was a hand or foot, perhaps even to the elbow or knee — well, the idea spread. By the time the early 1960s rolled around, according to the Tampa Bay Times, Vernon, Florida was responsible for roughly two-thirds of all loss-of-limb-related insurance claims in the United States.

Over the time period in question, a total of fifty people (give or take) lost a limb of some sorts, many if not all filing insurance claims thereafter. While the insurers attempted to bring lawsuits actions against some of these people, not one was convicted of insurance fraud. One alleged transgressor was particularly egregious, but, as the Times notes, he avoided conviction and walked away a one-footed millionaire:

“There was another man who took out insurance with 28 or 38 companies,” said Murray Armstrong, an insurance official for Liberty National. “He was a farmer and ordinarily drove around the farm in his stick shift pickup. This day – the day of the accident – he drove his wife’s automatic transmission car and he lost his left foot. If he’d been driving his pickup, he’d have had to use that foot for the clutch. He also had a tourniquet in his pocket. We asked why he had it and he said, ‘Snakes. In case of snake bite.’ He’d taken out so much insurance he was paying premiums that cost more than his income. He wasn’t poor, either. Middle class. He collected more than $1 million from all the companies. It was hard to make a jury believe a man would shoot off his foot.”

A few years later, a film maker named Errol Morris came to Vernon, hoping to make a movie (tentatively titled “Nub City”) about the purported scam. But faced with death threats and the like, he instead produced a much less controversial film of the town and named it, cautiously, “Vernon, Florida.” The well-regarded documentary focuses on the town more broadly, bringing to film many eccentricities about the community — but does not focus on the decision of many to dismember themselves.

Bonus fact: As of 1998, a British insurance company offered policies insuring against alien abduction; $150 would buy you $1.5 million in coverage. The offering company claimed to have sold roughly 20,000 policies.

From the Archives: Die Hard: More insurance fraud, with a victim who wasn’t part of the scam.

Related: “Vernon, Florida” the movie. 4.5 stars on sixty-two reviews.