How to Protect Yourself From Insurance Scams

Friday, December 12, 2014

insurance-fraud-imageInsurance offers a way to reduce any potential financial loss or suffering in the event that something goes wrong. It can cover unexpected events including collisions, illnesses, theft, property damage, and even death.

 

 

Needless to say, insurance is essential (and sometimes even required by law). When it comes to buying insurance, however, it’s important that you do your homework and make sure you’re buying from a licensed source. The last thing you want in your time of need is to find out that you’ve been a victim of insurance fraud and actually have no coverage at all.

What’s more, if you’re found driving with a false insurance card or no insurance, you could be charged with a criminal offence. If you are involved in a collision, you will not be covered for any damage to your vehicle, and you could be sued for damage to other vehicles involved, or for bodily injuries resulting from an accident. 

Signs of an insurance scam

Don’t know how to spot an insurance scam? Here are some ‘red flags’ to look for:

You’re asked to pay your premium in cash: Any legitimate insurance provider will more than likely ask that you pay your premium by cheque or credit card.

Meetings only take place in public places: Reputable insurance companies will have an office space for meetings.

You don’t receive a valid insurance card or a copy of your insurance policy: Once you’ve agreed to a policy, a trustworthy insurance company will always provide you with documentation.

Your car dealership offers to help you find cheap insurance: Don’t accept this kind of help—it’s against the law!

The deal seems too good to be true: It usually is!

Common insurance fraud tactics

Fraudulent phone calls: Phony insurance brokers might call you demanding that you urgently pay your ‘overdue’ premium in order for your coverage to continue. This is just a ploy to get your credit card information. If you’re not sure whether or not a call is legitimate, ask the broker to list some of the details of your policy. If he or she doesn’t know the details, it’s more than likely a scam.

False emails: Be skeptical of any email from your insurance company that asks you to confirm your identity and personal information. This is not a normal practice and could lead to identity theft.

Misappropriation of premiums: An insurance premium is the amount that you pay for your insurance plan(s), usually monthly, quarterly or annually. Unfortunately, there have been cases when insurance representatives have pocketed premiums for their own personal gain instead of sending them to the insurer.

Phony Insurance: A fake insurance representative sells you phony insurance from a company that doesn’t exist. Or, the representative poses as a broker from a legitimate company. You could receive documentation that appears to be official, but is actually worthless.

How to make sure your insurance representative is reputable

Before you sign on the dotted line, you need to make sure that your insurance company is licensed. Click here  for a list of insurance companies operating in Alberta (as of November 21, 2014). You can also see a list of companies that are no longer in operation here. You’ll also want to make sure that your insurance company is a member of Assuris or the Property and Casualty Insurance Compensation Corporation (PACCIC). If, for some reason, your insurance company fails, these organizations will protect your benefits up to certain amounts.

When you’re choosing an insurance broker, ask for references from other clients. Find out what training and qualifications your agent has and if he or she belongs to a professional association. You can also contact the Alberta insurance regulator for confirmation that your broker is licensed.

The next time you need of insurance, keep a lookout for the red flags listed above to avoid becoming a victim of an insurance scam. After all, when it comes to something as important as insurance, you can never be too safe!

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