You should be able to trust that your car insurance company will be there for you when you need it. However, while the vast majority insurers are legitimate, you always should watch out for car insurance scams – scams that are carried out by people inside and outside the insurance industry.
“Auto insurance scams are some of the most prevalent in the insurance industry, allowing fraudsters to easily obtain policies and take advantage of the ‘he said, she said’ blaming nature of auto accidents,” says Robert Siciliano, CEO of www.IDTheftSecurity.com, a fraud prevention and security company in Boston
Whenever dealing with car insurers, especially if you’re in the market for a new policy, do your homework. Make sure you check out the company, read consumer reviews online and consult the Better Business Bureau.
Here are four car insurance scams you should know about.
- Ghost agentsIf you receive an email, see an ad or get a phone call promising a deal that seems too good to be true, chances are it is. And in many cases, these unrealistic deals are being offered by “ghost,” or fake, insurance agents.Before buying a policy, you should check out car insurers thoroughly. For instance, contact your state’s insurance regulator to see whether the insurer is licensed. If possible, do business with insurers you know you can trust, such as those referred by friends and relatives.
- Low ballingYou’re delighted when an insurer quotes an unusually low rate for coverage. However, once your policy is in place, you’re notified that your original quote was incorrect and your new quote may be double or triple the original amount.Consumers should be on the lookout for unscrupulous salespeople selling “policies” from unlicensed insurance agencies and companies. “You could lose thousands of dollars if you suffer a loss and don’t have a real policy to pay your claim,” the nonprofit Coalition Against Insurance Fraud says.When in doubt, check with your state’s insurance department to see whether an insurer is licensed and whether the insurer has a stack of consumer complaints against it.
- Crash for cashCrash-for-cash scams occur when the victim unintentionally rear-ends the scammer’s car. They often do this by waiting to pulling out in front of your car in hopes of getting rear-ended. Crash-for-cash scammers capitalize on the fact that most state laws place the blame of an accident solely on the motorist who hits a car in front of him.Crash-for-cash swindles often happen at roundabouts, intersections and highway on-ramps.After the crash occurs, the scammer offers to accept cash instead of reporting the accident to an insurer. Many people take this option so they won’t risk a rise in their insurance premium or the loss of an accident-free bonus. The payment to the scammer can add up to hundreds or thousands of dollars.Siciliano says it’s best to file an accident report and go through the insurance process rather than dealing one-on-one with the scam artist.
- Soft-tissue scamYou see it in movies and on TV: Someone gets into an auto accident, then fakes neck or back pain the next day. This type of scam, known as a soft-tissue scam, succeeds because these injuries don’t require CT or MRI scans. The point of this type of scam is to milk money out of an insurer.Someone scamming your insurance company can cost you higher premiums in the long run. “Insurance prices stay higher because insurance companies must pass the large costs of insurance fraud to policyholders,” the Coalition Against Insurance Fraud says.