How to Avoid Insurance Scams and Frauds

Insurance fraud is a serious crime, one that affects thousands of citizens around the world, and costs consumers millions in higher premiums, unpaid claims, and increased prices for goods and services. As the majority of insurance scams often goes unreported, the exact cost and impact of this fraudulent activity can often be difficult to determine, but consumers can do their part by learning how to recognize and avoid fraud. To that end, here are some simple yet efficient methods that might allow you to evade insurance scams and fraud:

Become an informed consumer

When shopping around for the best insurance policies, visiting only the most well-known, established, and globally available providers is a good way of avoiding scams. In case you’re not sure whether a company is legitimate or not, checking your local government’s websites for licenses and certificates is also a good idea. Similarly, it’s important to know how insurance premiums are set. In most cases, they depend on your personal claims history and the height of risk involved, with higher premiums often coming with greater risk. This means that any insurance policy that is seemingly too expensive or too cheap for your particular circumstances might potentially be fraudulent.

Know your insurance agent

Consumers can sometimes work with unscrupulous insurance agents, and only realize they were victims of fraud once they attempt to file an insurance claim and come to the conclusion that they never actually had any coverage at all. In those instances, all financial and legal responsibility might fall on the consumer, which can be detrimental for most individuals. For that reason, it’s only recommended to work with licensed insurance agents. In the US and many European countries, for example, insurance agents are obliged to maintain proof of licensing at all times, and you have every right to request to see it if you are ever unsure about the legitimacy of a particular agent or seller.

Read through the fine print

Even if you do purchase insurance from trusted agents and established companies, some issues might still arise. For instance, major providers in Australia such as Allianz and ANZ have been under legal scrutiny lately for selling their customers worthless and unnecessary insurance products tied to credit cards and loans. These products are known as junk insurance and have often been sold under misleading and unethical sales practices to unaware consumers. And while the Australian government is making an effort to resolve this issue, the same might be happening in any country around the world, which is why it’s advised to carefully read any contract before signing, including the fine print.

Never sign blank checks or forms

In the same vein, you should never sign any blank application forms, as this is a common way fraudulent insurance sellers steal money, or even a possibility for real insurance agents to buy different, more expensive insurance products using the same form. Instead, you should completely fill in any applications yourself, and make sure the documents you are signing are legitimate. When paying for insurance products, keep in mind that no insurance agent will ask you to give them cash directly. The most common forms of payments are bank transfers, account withdrawals, filled-in checks in advance, and a visit to the insurance company in case cash is used.

Purchase your policies online

If you would like to avoid the risk of insurance scams altogether and purchase policies without having to talk to an agent, you also have the option of buying insurance policies online. Apart from cutting out the middleman, this method will also ensure a safe transaction. However, you still need to confirm that the website you are using for purchasing a policy is legitimate and recommended by the insurance provider, which you can check by seeing whether the website has a secure SSL gateway. Always make sure to follow the described payment steps on the insurer’s website, and never disclose your bank details to anyone else.

Don’t disclose your policy details

Disclosing details of your insurance policies to unknown third parties is another way you might become a victim of insurance fraud. At times, scammers might present themselves as insurance agents and ask about certain details regarding your policy, either claiming to be customer support workers or consumer rights personnel. It’s important to remember that legitimate insurance agents will never ask you for policy or account details, as that information will already be available and accessible to them. In case you receive a phone call asking for complaints regarding your insurance policy, you should always be on high alert.

Unfortunately, insurance fraud is a growing concern among consumers all over the globe. However, scams can still be avoided as long as you follow the helpful advice mentioned above, and keep in mind that any offer that seems too good to be true likely is.