Cybercrime of all varieties is on the rise, with scams and insurance fraud being no exception. There are many scenarios where you as a consumer can unknowingly fall prey, putting your assets, personal information and insurance premiums at risk. While fraudsters have perfected their skill in order to take advantage of insurance consumers who want to protect their assets, there are some tips you can keep in mind to help protect yourself from these scams. Read on to learn more:
What is Insurance Fraud? How Common and Costly is The Problem?
While most people think of insurance fraud as a person purposely damaging or destroying something in order to collect on its insurance value and that is true, there is another type of insurance fraud that is likely better described as an insurance scam. It places the consumer, not the insurance company being victimized or sometimes the consumer and the insurance company.
This type of crime is more prevalent than you might imagine. For example, according to the Federal Bureau of Investigation (FBI), insurance fraud and scams cost the average U.S. family between $400 and $700 a year in increased premiums. In addition, the Coalition Against Insurance Fraud found that some $80 billion in fraudulent claims payments were made annually. Therefore, it’s easy to see this is a major problem that needs to be addressed.
How to Avoid Becoming a Victim
In most cases, you can avoid becoming the victim of an insurance scam by keeping the following tips in mind:
1. Know and Trust Your Agent
Your insurance agent should be someone you know and trust. If you don’t know your insurance agent, it is much easier for someone to pretend to be them and contact you and initiate a scam. Don’t fall for this!
2. Know of and Pay Only For The Services You Have Received
Another way to stay away from insurance scams is to know what you are paying for and if you have received that service. Below, we will look at some examples of types of scams, and you will see that many of them would be stopped if consumers knew what they were paying for and what services they had or had not received.
3. Keep a Copy of Your Policy
Make sure you have a copy of your insurance policy to reference should the need arise. Often a nefarious inquiry will be easily recognized as such if you know your policy well and can double-check the details.
Types of Insurance Scams
There are many types of insurance scams making their way around the industry. Keep the following examples in mind, so you recognize them as the scams they are:
1. Nefarious Tow Trucks
There are many reasons you can find yourself in need of a tow, flat tire, car accident, dead battery, etc. With this scam, a dishonest tow truck driver shows up to you. They have you sign a blank document authorizing the tow. Then, later, they add in additional charges for services you never asked for and that might not even have been performed and your insurance company and/or yourself are stuck with a bloated bill. One way to protect yourself against this common scam is never accepting the help of a tow truck driver you or the police didn’t contact to assist you. If they just show up, be suspicious.
2. Invisible Passenger
This is a scam that involves a fender bender or car accident. You and the other driver exchange information, but you don’t contact the police and there are no witnesses. Only later do you find out from your insurance company that there is a passenger claiming injuries, drawing on your liability coverage. Problem is, you know there was no passenger in the car, so there is no way the claim is legitimate, but there is also no way to refute it. To keep yourself from becoming a victim of this scam, always make sure that you take pictures with your phone of the accident and take down information on everyone involved. It’s also a good idea to call the police, so they can file a report, even if the accident is minor.
3. Cyber Crooks
This isn’t one particular scenario but a whole division of crime that operates digitally through various cyber methods. Often these scammers will email you, text message you or call you claiming to be reputable companies. They will seem very legitimate and try to get information that in their hands will be used against you, like your personal information or bank information. To ensure that you are not a victim of this common scam, don’t ever give personal information through emails, text or on the phone (when you weren’t the one contacting them). Also, don’t be afraid to call and verify that what someone is saying is the truth. In most cases, reputable companies will not try to elicit payment via text message or emails. Again, simply knowing the people with whom you do business with personally can help you avoid a lot of these types of scams.
Stay Safe
Stay on the safe side, and be on the lookout. Don’t fall victim to these increasingly common insurance scams...Your insurance premiums and your wallet will thank you!
