Insurance fraud has been around as long as insurance itself. In early 2018, Florida’s Department of Financial Services’ Disaster Fraud Action Strike Team (DFAST) announced arrested a man in Seminole County for selling general liability policies to businesses after his insurance license expired in 2015. He admitted to stealing nearly $62,000 between 2011 and 2018 leaving his unwitting customers with no real coverage. Only after a business attempted to file claim after Hurricane Irma was the fraud exposed.
According to the Coalition Against Insurance Fraud, scammers are responsible for $80 billion in losses each year across all lines of insurance. Insurance fraud hurts both businesses and consumers, as it can result in increased premiums, wrecked credit scores and losses in thousands of dollars. Businesses and consumers must stay vigilant and keep one step ahead of people posing as licensed insurance agents and offering fraudulent policies.
Common insurance scams include:
- Stolen premiums. A deceitful person posing as an agent could pocket your insurance premiums instead of sending it to the insurance carrier. These fraudsters can steal tens of thousands of dollars in premiums for their own personal use.
- Fake insurance. Unwary businesses and consumers may pay the premium for what sounds like a great insurance policy only to later discover they are unable to file a claim because the policy does not exist.
- Faulty investments. Insurance scammers may entice people looking for an insurance policy into faulty investments by promising a high return. For example, they may hand out promissory notes and promise quick and high returns.
- Selling coverage you don’t need. Dishonest agents may push coverage you don’t want or need. They may also try to slip in extra coverage you didn’t request while expecting payment in return.
Consumers should be wary of agents who advertise cheap insurance policies, are difficult to reach via phone, or ask for cash payments only. Always verify that your agent is licensed to sell insurance before signing a contract or making a payment. If you are unsure whether an agent is licensed, many states have a department of insurance website with an online lookup, or you call the department by phone.
If an agent is pushy and pressures you in any way, move on to a more reputable agent. Good agents are there to inform you as experts in their field. There is never a good reason to push someone into an insurance policy.
While the vast majority of insurance agents are honest in their practices, consumers should still scrutinize their current insurance policies and watch out for signs of insurance scams when seeking future coverage. It much too important to have the right insurance in place when an incident occurs and you have a claim.