Insurance scams are on the rise. Here’s what you need to know to play it safe. (iStock)
No one wants to be the victim of a scam. Unfortunately, they’re more common than you might think — particularly in the insurance world.
According to the Insurance Information Institute, insurance fraud scams result in about $40 billion in losses every year — losses that insurance companies, taxpayers, and the victims of these scams are forced to pay for (about $400 to $700 per household annually).
Whether you have or need home insurance or auto insurance, you should be aware of these scams and how to protect yourself. Fortunately, there are several signs that make them easy to identify.
Watch out for these 4 home and auto insurance scams
Want to make sure you don’t fall victim to one of these scams yourself? Here’s what to be on the lookout for:
- Unsolicited contractor and repair offers
- "Free" windshield repairs offers
- Phone calls and emails selling you a new policy (or saying your insurance has expired)
- Exaggerated damages or injuries
1. Unsolicited contractor and repair offers
According to Paige Schaffer, CEO of global identity and cyber protection services at Generali Global Assistance, these scams often crop up in areas hit by big storms or natural disasters.
"Victims of hurricanes or other natural disasters are often preyed on by scammers," Schaffer said. "Fraudulent contractors will go knocking on doors, providing low-ball estimates for repairs and then enticing unsuspecting homeowners to sign a contract and put down a deposit."
Sometimes, the contractors run off with the deposit and never put in the work, and in others, they may provide shoddy service or poor quality materials. They may even overbill the insurance company and pocket the rest.
To prevent these scams, it’s important to shop around for home repairs and always do your research on contractors you’re considering. If you want to see what kind of homeowners insurance options are out there, head to a trusted site like Credible. Credible makes it easy to compare quotes, saving you both time and money.
"Regarding home repairs, make sure to get more than one estimate," said Marissa Sweet, a commercial property and casualty insurance consultant at PropertyCashin. "Also, we highly suggest staying in close contact with your insurance company through the claims process. You can also do a search on the contractor for licensing history and lookup online how long they have been in business. Asking for references can be very helpful."
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2. "Free" windshield repairs offers
"Windshield repair stops along the side of the road are another example," Sweet said. "They often state it will have no effect on an insured but can show up on the loss reports as a claim and, with too many, they can adversely affect you," Sweet said. "This often results in higher premiums for everyone."
Though these offers can be tempting, Sweet said it’s critical to speak with your car insurance carrier directly to find out what’s covered and what’s not.
"If someone states they need your insurance info and that they will handle filing a claim, we would suggest you call to verify what the insurance carrier's stance truly is before completing anything," Sweet said.
If you find out your car insurance doesn’t quite cover what you wanted, consider shopping around for a new policy once your current one expires. Credible can help with this process.
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3. Phone calls and emails selling you a new policy (or saying your insurance has expired)
Unsolicited phone calls are another big red flag. Unfortunately, these are often phishing attacks, with the caller looking to get your financial details and steal your identity.
"Identity theft through insurance scams is alarmingly on the rise in the U.S. and around the world," said Attila Tomaschek, a researcher at digital privacy resource ProPrivacy. "It’s a scam that is becoming increasingly common and one that all home and car owners need to be aware of."
According to Tomaschek, these callers often use aggressive sales tactics and offer too-good-to-be-true deals. Those that operate via email take a similar approach, presenting their offer as limited-time or urgent.
"The phishing email will be designed specifically to appear official and as though it is being sent by a genuine and well-known insurance firm and will encourage the recipient to click on a link or download an attachment to access the limited-time offer," Tomaschek said. "However, the link will lead to a phishing website designed to steal the recipient’s sensitive personal and financial information, and any attachment will typically contain malware that could allow the attacker to take control of the victim’s device to access private data."
If you have any questions about your current policy or are interested in getting more insurance coverage, then Credible can assist (and protect) you to make sure you're not getting scammed out of cash.
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4. Exaggerated damages or injuries
Sometimes, the scam is just an intentional exaggeration of losses by the other party — typically after an accident or some sort of incident has already occurred.
‘Victims of car accidents can also be victimized further – sometimes by the people in the other vehicle who exaggerate or make up injuries or by the repair shop that wants to charge them for repairs that aren’t necessary or even use counterfeit parts that are unsafe," Schaffer said.
This also happens with home insurance, according to Bill Martin, president and CEO of Plymouth Rock Home Assurance.
"Repairmen or contractors may offer to inflate the cost of the repair service provided to cover the deductible — or just to make more money on the repair themselves," Martin said. "Remember, there are victims of all overpayments in insurance — and usually, it is the cost for honest people to buy coverage."
Visit Credible to examine all your auto insurance options – including comprehensive car insurance.
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How to protect yourself
Your best protection against scams is skepticism and research. If you get an unsolicited insurance call, use Credible to compare the caller’s offer to other auto insurance and home insurance rates you may be eligible for. You should also check out reviews and ratings for the caller’s supposed agency, or even call them up directly (using the number on their website) to be sure the agent is actually employed there.
Finally, if someone says they’ll file insurance claims on your behalf or cover your deductible, be wary, and call your insurer yourself. Chances are something’s amiss.
Want to make sure you’re not paying too much for home or auto insurance due to rising rates of fraud and scams? Credible can help. Get multiple policy offers in minutes with just one quick form.
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