Is Your Auto Insurance Agent Trustworthy, or Lining Their Pockets
Spotting a con can be difficult, especially if it’s an area you’re not familiar with, like auto insurance. Knowing the difference between outright fraud and a dishonest insurance agent who is stealing from you subtly can be a little more difficult.
Insurance fraud can occur during the process of buying, using, selling or underwriting insurance, and is estimated to cost more than $100 billion, according to the National Association of Insurance Commissioners, or NAIC. Auto insurance fraud is just one type of insurance fraud.
Here are some major types of fraud to look out for from auto insurance agents, followed by some lesser types of dishonesty that agents may be guilty of:
Selling bogus policies. Fake insurance companies and dishonest insurance agents can defraud consumers by selling fake policies that cost significantly less than the traditional market as a way to lure people trying to save money. The premiums are collected by the fake insurance company, which may provide consumers with documents that look real.
In other cases, legitimate insurance agents who have been misled by fraudulent companies may be selling the policies without knowing they’re fake.
Look out for premiums that are 15-20% less than comparable coverage elsewhere. That’s a sign the policy is priced too low and may be fake.
If you try to call the insurer to get more details or ask a question, and it’s difficult to get through on the phone or you can’t find a listed phone number, then you might be getting scammed.
Confirm that a company is legitimate by checking with your state insurance department if the insurer exists and is authorized to sell insurance in your state. Or file a complaint online. Also call your local police department if you suspect fraud.
Keeping the premium. In this case, the insurance company is legitimate but the agent isn’t. A dishonest agent could collect premiums and not deliver the insurance policy to the company. The insurer could cancel or refuse to renew the policy without the consumer knowing about it.
A sign that you’re being defrauded this way is if the reputable company doesn’t send you an insurance identification card or a copy of your policy in a timely manner, if at all.
Mixing client information. A dishonest agent can commit fraud by using personal and financial information of a client with good credit to get better rates for clients with bad credit. The Utah Insurance Fraud Division found such fraud, which allows the client with bad credit to do business with the agent, and for the agent to receive increased commissions and bonuses.
Selling extra coverage you don’t want. Called “sliding,” it’s when an agent slips items into an insurance policy that the client didn’t ask for, such as a motor club membership or accidental death coverage.
Not questioning what they don’t know. Ignorance isn’t the same as dishonesty, and it isn’t exactly fraud, but an agent who doesn’t know how their policies work may not be selling you all of the coverage you need.
Michael Gumprecht, a personal injury attorney in the Atlanta area whose practice is dominated by auto accidents, says he was at a local business get together and was swarmed by agents who wanted him to explain what they “hadn’t been taught” about insurance.
“I was taken back knowing that their customers relied on their expertise when choosing what types of coverage to purchase,” Gumprecht says.
Most of the agents didn’t know what medical payments coverage, also called MedPay, was for, he says. Some of the agents sold auto insurance policies as “full coverage” to their customers without MedPay added or included, Gumprecht says. MedPay pays medical bills up to the coverage limit for anyone in your car in an accident, regardless of who is at fault.
“I wish many insurance agents were more honest with their customers about how much they don’t understand about their own policies,” Gumprecht says, “but many more don’t even know how much they don’t know as a result of how they’ve been trained — and that is a very scary thought.”
Not listening and pressuring you. Again, this is an area that isn’t outright fraud, but an agent who doesn’t want to have an open dialogue, is unwilling to answer your questions or you feel like they’re pressuring you could be a sign of a dishonest agent. If they say you must sign a policy immediately because the premiums will go up soon, run away.
“If you’re speaking with an agent who is not willing to bring your individual thoughts, questions and needs into the conversation, then they are not looking out for your best interest,” says Christin Wiley, a personal lines account manager at William Blount and Associates, an insurance company in Knoxville and Nashville, Tenn. “There are many agents out there who are just looking to sell their next policy.”
Wiley recommends trying to find an agent who understands your lifestyle and needs, and returns calls or emails promptly.