10 tips for avoiding car insurance tricks and other agent scams: Internet Scambusters #675
Car insurance is expensive enough, but not as costly as falling for a cut-price scam.
This week, we explain how buying a policy from a fake or dishonest agent could lead to you losing your car.
And we have 10 tips that will help you spot the phonies, plus a warning about a new Facebook scam.
Now, here we go...
Bogus Auto Insurance Victims Could Lose Their Cars
Imagine buying a car insurance policy from a reputable company, then seeing your auto being towed away while you're accused of being part of a scam.
It happens. And here's how it works.
When you buy your new vehicle, you encounter a supposed insurance agent who says he can get you a great deal with a big-name insurance company.
You may encounter this phony hanging around used car lots or advertising online and he'll likely tell you he's with a well known local insurance agency. So, everything seems legit.
Let's say you've already made some inquiries about insurance rates or this so-called broker tells you what insurers would regularly charge -- say $2,000.
But this guy tells you he can get the same coverage for $1,200. Maybe he says you don't even have to pay a cent, or pay only a small deposit, until he presents you with your proof of insurance.
What a deal! And, after all, what've you got to lose?
Behind your back, here's what he does.
He buys that $2,000 insurance policy from one of the genuine, direct online insurers in your name, agreeing to make monthly payments of around $160.
So his outlay is just $160 before he gets the proof of insurance, which he gives to you. Either you already paid him the $1,200 or you have to pay it there and then, before he hands the document over to you.
Then he disappears with your $1,200 and you never hear from him again.
Meanwhile, not knowing that the insurer is waiting for the next monthly payment, you miss that payment and maybe the next one before you find yourself in trouble.
Because you're a participant in a fraud -- the scammer may also have supplied all sorts of fake information to the insurer in order to get that certificate -- you could be at risk of a criminal prosecution or, as had already happened, see your car repossessed and sold at auction.
In some documented cases, police have been unwilling to give victims the benefit of the doubt, accusing them of playing a knowing part in the scam, leading to the confiscation of their vehicle.
Sadly, this is just one of a number of scams used by fake insurance agents.
According to the Coalition Against Insurance Fraud (CAIF), bogus or dishonest agents have also been caught pocketing insurance premiums for just about anything, selling fake policies, selling coverage people don't need, and paddling worthless investments.
The CAIF recommends 10 commonsense steps you should always take before buying insurance:
1. Check that the agent is licensed by the state. Use their interactive map to find your state contact.
2. Check with consumer agencies to see if the agent has been the subject of any complaints.
3. Back off if you're offered a rate 30 to 50 percent below normal.
4. Pay by check or money order made out to the insurance company if you can, not the agent, and get a receipt.
5. Beware of requests for payment in cash or offers of deals from someone you just happen to meet in a non-business environment like a restaurant or bar. Ask to meet him at his office.
6. Make sure the agent explains everything and pay only after all documents have been completely filled out.
7. Be wary if the agent seems evasive or unable to answer questions, or seems in a hurry to get you signed up.
8. Don't sign a blank form giving an agent permission ("power of attorney") to make an insurance application on your behalf.
9. Consider getting a second opinion from another broker if you feel uneasy about any aspect of the deal.
10. Check on the health of the actual insurance company your policy is with. Use one of the search boxes on their home page.
We'd also add that there's no harm in calling the customer service department of the insurance company your broker has supposedly connected you with, to make sure all is in order with your policy.
And it also makes sense to use recommendations from family or friends for the name of a reliable and trustworthy agent.
Whatever you do, it goes almost without saying that to reduce the chances of being caught out by the car insurance fraud discussed above, you should never do business with someone just because they tell you they're an agent -- especially one you happen to bump into in a car lot or a bar!
Alert of the Week
Tricare, the civilian health and medical program of the uniformed services, has warned of a secret shopper scam that's being mailed out to its members and beneficiaries.
Purportedly from a company called Tricare Survey (which doesn't exist), the scam uses the well known advance payment ruse -- victims receive a check with which they're supposed to buy gift cards and keep some money for themselves.
Then they have to submit the card numbers to the supposed company and the card value is spent before the original check is found to be a dud.
Old trick, new guise. If you're in Tricare, bin this offer.
That's it for today -- we hope you enjoy your week!