Insurance Frauds and Scams: How to Avoid Becoming a Victim

The demand for insurance is constantly high, and as long as there are people ready to invest in it, there will be people who are ready to take advantage of others. Whenever you buy insurance, there’s a possibility of falling prey to fraud, but you shouldn’t let that stop you from being insured. While scammers constantly try to come up with new ways of committing fraud, the authorities are also learning how to stop them the best way. To avoid becoming a victim of insurance fraud, here’s what to keep in mind:

Learn about insurance fraud

It’s pretty simple—insurance fraud is a crime with many victims. Insurance fraud is present all over the world, costing people millions of dollars in unnecessary premiums, increased costs of coverage and boosted prices of services and goods. It’s hard to see the full extent of insurance fraud because a lot of it goes unnoticed or unreported. So the first thing you should do to protect yourself from fraud and scams is to learn how to recognize them and report suspicious activities to the authorities.

Ask for IDs

In some cases, people discover they have been a victim of scams and fraud only after they file a claim and find out they don’t have any coverage. And unfortunately, an uninsured home damaged in a fire or cleaned out by burglars will be solely your responsibility. You will have to use your money to restore the property and pay back any mortgage. Similarly, if you’re involved in an accident in an uninsured car and receive a lawsuit, all your personal assets are subject to forfeiture. Therefore, you should only deal with licensed agents and stable companies. If you can, don’t hesitate to ask for their IDs and proof of being licensed—it’s your prerogative.

Get a copy of your policy

Any legit company will provide you with a copy of any type of insurance policy, together with endorsements and declarations. All the documents should outline your coverage and its limitations. You should receive your copy soon after you purchase your insurance. If you don’t get your copy, push your insurer, agent or broker to provide you with one. In case you don’t receive any explanations, you can always contact financial service offices and check whether you have all the insurance you’re paying for.

Check the listing

Australia just had a huge scandal when it comes to insurance fraud. Tens of thousands of people have been cheated off their money by paying for unwanted, unnecessary and worthless insurance products attached to loans and credit cards. These “junk insurance” products often cost thousands of dollars for consumers. When signing your policies, make sure to study premiums and ask if you see any unwanted cover (keep an eye on things like Consumer Credit Insurance, Mechanical Breakdown Insurance, Extended Warranty, Tire and Rim Insurance, etc.) If you notice any discrepancies between what you’re paying for and what you agreed on, contact a junk insurance claim management service and see if you’re eligible for a refund. Your chosen agency will manage the whole process and you’ll pay only if you get your refund.

Never sign blank forms

In many places, signing blank insurance application forms is a thing practised by many, but it can leave a lot of space for fraud. It allows fake sellers to scam you or insurance agents to buy insurance products using your blank form. To prevent this from happening, make sure to always fill in the application forms yourself. Check for spelling mistakes, read the terms and conditions, inclusions and exclusions and keep an eye on cases of withheld information and misrepresentation (especially if the document is being filled out by a third party on your behalf).

Don’t pay in cash

A legit insurance agent will never ask you for cash—it all goes through the agency and proper accounts. To ensure you’re giving your cheque to the right people, ask the customer care center to confirm the details. And don’t disregard any tiny discrepancies—these allow fraudulent agents to deposit cheques under a similar name and make you a victim of fraud. Even if an agent is representing a firm, all the details on your cheque should go to the insurance company, not the firm.

Trust your gut

Even if you don’t know much about insurance or scams, don’t hesitate to listen to your intuition. If something sounds too good to be true, it probably is. With any suspicious deals or sketchy insurance agents, check twice with the insurance company or even the authorities before signing any documents or cheques.

Having proper insurance can literally save your life, but being a victim of insurance fraud can also ruin it. So make sure to invest your money with the right people and keep an eye on any suspicious activity. Don’t hesitate to report a crime, get your money back and prevent other people from being scammed out of their money.