There have been, even within our agency, reports of scammers calling for payment. It’s important to keep in mind that an insurance agency will never reach out for payment without having your policy number or any information handy. Having a local broker is even better, as you typically know who your agent is, so there is no doubt when you get a call from an unknown person, that it is a scam.
Scammers prey on the perceived ignorance of people; some policy holders find insurance complicated and can feel intimidated, making it easier for scammers to target them. With this in mind, let's take a closer look at insurance fraud and the measures that can be taken.
There are two types of Insurance Fraud: Soft Insurance Fraud and Hard Insurance Fraud. Here’s the difference:
Soft Insurance Fraud:
Intentionally exaggerate a legitimate claim – for example, saying a previously needed repair is due to the reason for the current claim, or falsely claiming injury to receive financial compensation.
Provide false information for a lower premium – for example, excluding poor drivers in the household from the policy, or using a garaging address that will lower the premium
Hard Insurance Fraud:
An organized or deliberate act to gain financial compensation – for example, staging an accident, or setting fire to insured property
Some scams are more common than others. Here are a few of the more common practices of insurance fraud:
Spam Calls Asking for Payment:
When a scammer calls, it’s generally with a message regarding policy cancellation due to non-payment, or payment needed to keep policy from lapsing. Unless the policy holder uses a local agent/broker, it can be difficult to know who you’re speaking with. Even so, there is no reason an agent would call for payment without having your policy number or any of your information. Be very wary of ‘confirming’ information that they may not already have.
Fake Injury Claims:
Accidents are sometimes unavoidable; watch out for other drivers who are okay at the scene and report whiplash or other pains after the fact. While sometimes adrenaline can cause us to overlook potential pain, there is the possibility of being scammed for money due to bodily injury claims. Additionally, these claims can raise the premiums of the at-fault driver making it even more expensive than it initially appears.
Fraudulent Vehicle Repair:
Though many of us drive, far fewer of us know how to fix our own vehicles. Be careful of mechanics who quote exorbitant amounts, install substandard parts, and pocket the difference. These repairs can not only cost you more down the line, but also be extremely dangerous!
Staged Accidents:
Scammers can go so far as to carefully orchestrate accidents, using myriad methods to get a larger payout such as:
- Diversion tactics utilizing more than one vehicle to force another driver to get into an at-fault accident such as a fender bender
- False witnesses to an accident make it difficult for an innocent driver to prove what actually happened
- Purposely taking advantage of weather conditions to ‘slip’ or otherwise get hurt on insured property
On the bright side, many scams can be avoided by taking some precautions. Here are some ways to help protect yourself from insurance fraud:
- In case of an accident, take more pictures than you think you’ll need
- Be wary of bystanders and witnesses
- Take notes while everything is fresh in your mind
- Request a copy of the official report
- Watch out for unsolicited tow truck drivers
- Alert your insurance agent
- Report the scam to authorities
There are scammers who cater to specific demographics, believing them to be easier targets. While this may not actually be the case, it’s important to stay vigilant and when in doubt, call your agent!
Documenting everything is a crucial way to protect from financial loss and potential headaches down the road. If you have any questions or believe you have been the victim of a scam, please reach out to [email protected] and report the scam to the local authorities.
