I had a couple of my clients call me today about a story that they saw on the news last night. This story was rather upsetting. It was about fake insurance agents selling to consumers bogus insurance policies. What the agents are supposedly doing is selling a real insurance policy for cash and then sending the insurance company a bogus check to pay for it or they aren't sending a check at all. They tell them that they have insurance, they give them paperwork that shows they have insurance but in reality, they don't have coverage, nor do they have an insurance policy. It's all a scam, can be very misleading, and so very illegal. What's interesting in this story is not only is law enforcement going after the fake agents but they are also going after the people that bought the fake insurance. They are impounding the car of those that purchased the fake insurance which to most people might not seem fair.
Insurance fraud is a growing problem. It's bigger than just fake agents selling fake policies. Did you know that in 2013 16% of the the certificates that are turned in at the Secretary of State were fake. That's a huge number. Some of these people got duped but at the same time some of these people were the ones duping. There are many people that are purchasing or duplicating fake certificates to try and cheat the system or to save a dime. There was even a craiglist ad that someone posted letting people know he is selling fake insurance certificates. I know, insurance can be expensive, but if you knowingly purchase a fake insurance certificate, it's illegal; you contribute to fraud, and could serve some jail time.
So what can you do to make sure that you are purchasing a legitimate insurance policy.
First, you can make sure your agent is a licensed professional. Every agent is required to have a license to sell insurance and with that they have to renew it every 2 years. A reputable agent should be more than happy to show you his or her license.
Second, make sure you purchase insurance from a reputable agency like the EW Smith Agency. We’ve been around for a long time, since 1917 in fact. Being in business for that long of a time can say something about an agency. If we weren’t doing it right, we wouldn’t be here anymore.
Third, never buy insurance from someone who knocks on your door. This isn’t girl scout cookies being sold. If they don’t have a physical office, then they probably aren’t the real deal.
Fourth, make sure to check for errors and misspelling on both application and certificate. If the company name is spelled wrong or any of the fine print, then it’s a sign that it’s bogus.
Fifth, make sure that whoever you are buying insurance form isn’t backdating your policy. Agents aren’t supposed to sell coverage for on a date that has already happened.
Sixth, when buying insurance if an agent tell you that you can only pay with cash or money order it might be a sign that you are being ripped off. Insurance companies have many different option for payments. However, if you want to make sure your insurance company does gets your money, then pay with credit card or through your checking account. By doing so, your money goes directly to the insurance company. It doesn't go to the agency first and then to the insurance company. (Keep in mind, its still okay to pay with cash. But if its a cash only place, be leery.)
Lastly, if it looks too good to be true, it probably is.
These 7 tips should help you determine whether your insurance is a scam or not. Keep in mind, if you if you have any doubt, go somewhere else.
(Photo by Stuart Miles. Published on 11 November 2014)