Auto insurance is a huge business right now. Aggressive marketing online and on TV works to encourage people to switch companies to take advantage of low rates, and consumers are always eager to find a discount on their insurance coverage. Unfortunately, whenever money is involved, scam artists aren’t far behind, and insurance scams are rampant. Whether from a person claiming to be an agent for a company, a company that’s really a front for a scam, or third party site fishing for your personal information, plenty of traps exist for people who aren’t careful. A vigilant consumer can avoid these pitfalls, however, and guarantee his safety.
Here are 7 tips for avoiding insurance fraud:
1. Protect your account information. Your policy number and other identifying insurance documents should be safe-guarded as carefully as you guard your bank account information. If an identity thief gathers this information from you, they could file specious claims against you or damage your credit through other forms of identity theft.
2. Never agree to pay any up-front fees. Insurance companies don’t require you to pay to receive a quote or set up a policy. The only payments you should make to an insurance company are your monthly premiums.
3. Beware of third-party websites. Some may require you to input unusual personal information to obtain car insurance quotes. While many of these quote comparison sites are legitimate, most should not require you to provide a credit card number. If in doubt, check the site’s privacy policy, and search online forums to be sure you’re dealing with a legitimate company.
4. Avoid unsolicited offers. Most reputable insurance companies won’t approach a customer out of the blue; if you’ve never requested a quote, be highly suspicious of phone calls or emails asking for your information.
5. Be leery of extremely low rates. Everyone wants to save money on car insurance, but if an offer seems too good to be true, it probably is. A quote that’s substantially lower than any other company may be fraudulent.
6. Research the company to make sure it’s legitimate. You can search online, or check with your state’s insurance department to verify that the company is what it’s representing itself as. The Better Business Bureau also maintains information about insurance companies.
7. Read any document carefully before signing it. Some companies may sneak in clauses or limitations into the contract without explaining them to you. Ask questions about anything you don’t understand, and if they can’t answer, consider another company.
Most insurance companies are reputable and will be happy to answer any questions that you have about the policy. Some people will claim to be representatives of a company they don’t really work for, however, and some small local “insurance companies” are really scam artists in disguise.
By learning how to spot a scam, you can keep your information safe and guarantee that you’re never caught off-guard by confusing contract wording.
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