Car Insurance Scams: How to Avoid Them

Car insurance scamsHow to avoid them

Car insurance scams, according to the Insurance Information Institute, is a deception committed against an insurance company for monetary advantage. The rising number of car insurance scams cases has insurance companies and policyholders concerned. 

The losses inflicted to the insurance business by frauds are projected to be above Rs. 30,000 crore every year, according to a report by the Forensic Centre for Studies. 

Insurance can be daunting and difficult for some policyholders, but scammers see auto insurance as a chance to profit from people’s inexperience. They defraud car owners and insurance companies out of lakhs of rupees by lying outright or embellishing the truth.

Car insurance scams are mainly of two types

Soft Insurance Scam

This involves misrepresenting the severity of an otherwise valid auto claim or providing misleading information in order to secure a reduced premium or boost the likelihood of an auto application being accepted.

Hard Insurance Fraud

Hard insurance fraud is far easier to spot than soft insurance fraud. It is the purposeful and planned staging of a car accident, injury, arson, or theft in order to defraud the insurance company.

Most common Car Insurance Scams

Agent Scams

You become a target for frauds as soon as you purchase your vehicle. If an insurance agent is dishonest, he might defraud you by not setting up the insurance plan that he promised and instead keep your money. In the end if you are involved in an accident, you become responsible for the charges.

Other agents insert extra coverage into your insurance that you don’t desire. This tactic, known as “sliding,” can add thousands of rupees per year to your payments, allowing the agent to earn a bigger commission. Scammers generally utilise fear and confusion to encourage consumers to hurry, according to the National Association of Insurance Commissioners (NAIC).

To prevent yourself from such scams, always do proper research before buying any insurance policy and avoid rushing into purchasing one. Also, before signing the policy papers, go through them thoroughly and ask for a receipt and policy papers after signing up for a policy. And if needed do not hesitate to confirm any details from your insurance company.

The Bad Samaritan

If you’re in an accident, be wary of strangers who approach you while you wait for the cops to reach at site and file a report. Such people could be scammers trying to dupe you. They pose as lawyers, doctors, or independent insurance agents or consultants. 

They attempt to obtain your personal information in order to file false insurance claims on your policy. False claims can result in higher rates or possibly the loss of insurance coverage.

To avoid becoming a victim of this con, follow the steps below. Make sure you take care of the appropriate paperwork with your insurance company and the other driver’s insurance company, and that you don’t give out any personal information to anyone else.

Stages Accident Scam

It is a situation where scammers will meticulously plan an accident. There are a lot of such schemes and tactics to plan and execute fake accidents, like in “the drive down,” a seemingly pleasant stranger with “right of way” waves you into traffic and then actively rams into the side of your automobile, merging into traffic just like you. 

He’ll then deny giving you authorization, leaving you open to prosecution. A similar scam can happen when two cars compete for a parking spot, resulting in an accident and an insurance claim. The sideswipe is another form of manufactured collision, in which an eagle-eyed criminal will purposefully crash your automobile if you slip into the outer lane when turning through a two-lane turn zone at an intersection.

The easiest approach to avoid these kinds of problems is to keep attentive and observant, and maintain your lane at all times while adhering to traffic rules and procedures.

Fake Injury Scams

This can occur in any type of collision. When a fender-bender occurs, the other driver might report injuries right away. If the driver requests hospitalisation, he will make a claim with your insurance carrier, even if the claim is false, to cover the cost. Because many ailments are difficult to diagnose, con artists may work with and pay shady doctors, chiropractors, and physical therapists to advocate their injury stories and obtain a settlement from insurance companies.

To protect oneself from such swindles, even minor car accidents should be reported to the police. It may be inconvenient for the time, but having a police report to provide an official account of the situation will protect you in the long run.

Exaggerating Damages Scam

Often dishonest repair businesses commit this kind of fraud. If your mechanic or shop issues a bill to your car insurance provider for new parts or claims the repair took longer than it did, they are defrauding you. 

Body shops may also overcharge an insurer (and a customer) for necessary repairs, inflating repair prices. The shop can profit from needless repairs by intentionally overstating the accident damages.

Taking your car to someone who is a professional mechanic is the best way to avoid such scams. To discover a reputable body shop, you can seek suggestions from family and friends or consult your insurance company for the recommended list of mechanics they have.

Conclusion

Fraudulent car insurance scams is a severe and potentially hazardous crime. Notify your insurance company if you feel you’ve been a victim of fraud. If you feel you’ve witnessed fraud, contact your state’s insurance department. 

Even if your automobile has minimal damage, it is always a good idea to report it to the police because it makes it more difficult for fraudsters to file a bogus claim. If feasible, place a camera in your glove box to prevent scammers and fraudsters from filing a false claim. Always contact a tow truck personally and avoid going to tiny repair shops to secure your car’s safety. You can contact us if you get stuck to any kind of scams.

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