The Most Common Insurance Scams and How To Avoid Them

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Everyone knows that they need to be careful when choosing their insurance policy. The insurance industry is one of the biggest and most lucrative industries in the country, which unfortunately makes it a target for people who are looking to make easy money through deception. These scammers use financial security as bait to lure their victims, and the resulting insurance fraud leaves them with a substantial amount of quick money.

There are plenty of insurance agents and policies which are legitimate, so if you ever feel uneasy or suspect that you might be dealing with a scammer, don’t be afraid to look for a different insurance agent.There are certain signs that you need to be on the lookout for when selecting your insurance which will help you make sure that you don’t fall for these common insurance scams. 

Fake Insurance

This is one of the most egregious examples of insurance scams. It involves an agent selling their victim an insurance policy with their company, neither of which exist. In many cases, the scammer will build up their firm’s reputation by making exaggerated claims, even going as far as fabricating documents and certifications in an effort to convince the victim of their legitimacy.

Often, the unsuspecting victim pays a premium for what they’ve been assured is a great insurance policy, sometimes for months or years, before the scam falls through when they need to file a claim. Never sign up for insurance with a company whose existence you can’t verify through channels independent of the agent selling you the policy.

Premium Theft

 Even if you purchase a legitimate insurance policy, you’re still not completely safe from fraudsters. Premium theft and embezzlement occurs when your insurance agent steals the money you’ve paid for your insurance premium instead of it going towards your insurance policy. A good way to catch this scam is by regularly checking your payment history. If there is a discrepancy between the amount you initially paid and your regular payments, it’s very likely that the original sum for your premium was stolen by the agent.

Switching Policies

This may not outright seem like an insurance scam; however it will have the same effect on your finances and insurance as the other common fraud cases. The switching policies scam is usually used by agents who make most of their salaries from commissions, which will lead to some agents pressuring you and even blatantly lying in order to get you to switch your current policy to the one they’re offering. Even if you’re perfectly satisfied with your current coverage, they will still try to persuade you that the plan they’re offering would be an upgrade. If you haven’t already been considering changing your insurance coverage, there’s no reason to start over with the one they’re offering you.

Hidden Charges and False Advertising

Nearly everyone would be tempted to purchase what seems like an excellent policy with low premiums. Unfortunately, most victims end up paying much more than what they initially thought. This is one of the most prevalent forms of this type of insurance scam. The agent who is selling the policy may neglect to mention the charges that will later significantly raise the payments, or they may directly lie to the victim. In many cases, the agent selling the insurance policy will try to downplay or even lie to hide the disadvantages that the coverage has. Often, the victim may not have taken the time to fully review their contract before signing it, but even if you do read the full contract, there are plenty of misleading details that can deceive you into paying more than expected.