Auto insurance scams are often created to take advantage of people who are in need of affordable auto insurance. Unfortunately, these scams can leave an individual with zero financial support if they are involved in an accident. This article will discuss some auto insurance scams and how to avoid them.
The insurance industry is a high stake competitive space. With operating costs and risks increasing, it’s no wonder that scheming companies are coming up with new ways to cash in on unsuspecting customers.
No matter your role in the industry, learning about fraudsters intent on ripping you off is crucial for staying safe and profitable. Unfortunately, there people waiting to take advantage of you for their benefit. When it comes to auto insurance scams, there are many out there waiting to take your hard-earned money and leave you unprotected should the worst happen.
Thankfully, with this blog post as your guide, you can steer clear of these scams and focus on protecting yourself from financial ruin in the event of an accident or other unfortunate circumstance.
Before you buy an auto insurance plan, you should know how auto insurance scams work. Scams are attempts to intentionally deceive you to spend money on something that isn’t worth it. They might be enticing and offer benefits that sound amazing, but that’s because they are designed to take your money.
Not all auto insurance companies are trustworthy. Some unscrupulous providers give their customers a raw deal by selling them expensive policies with hidden costs and limited coverage.
If you know what to look out for, you can protect yourself against these scams and get the most out of your auto insurance policy.
We listed below some common auto insurance scams and tips on how to avoid them.
Auto insurance scams and the ones to avoid
Drivers are trusting when it comes to auto insurance, so scammers know that this is an opportunity for them to take advantage. Unfortunately, there are many examples of auto insurance scams out there. If you don’t trust your agent or broker and feel like something is not right about the coverage you’re looking at, you should listen to your gut instinct.
There are lot of ways to identify a potential scam is going on. Keep reading to learn more about common auto insurance scams and how you can protect yourself from being taken advantage of by a dishonest auto insurance agent or broker.
1. Staged accidents
Insurance scammers can stage an accident to leave you at fault so your insurance company can pay for the damages, leaving you with higher premiums and bad driving credit. One or multiple drivers can stage this accident.
How staged accidents work
There are different ways people stage accidents to put you at fault;
- Brake-check scams: Here, the scammer finds a victim, most time, they target elderly drivers with expensive cars and abruptly swerve and stop in front of them, leaving the driver no time to hit the brakes quickly. This then leads you to hit his car from behind. Since the accident is from behind in a moving lane, the victim takes the blame.
- Intersection scam: This scam involves two people, “the driver” and “a witness”. The driver waits for you to drive into an intersection and the T-bone your vehicle. The fake witness then goes to make a claim to the police that you pulled out on the stop sign or red light, putting the blame on you.
- Pull-out scams: In this scam, the insurance scammer waves at you and assures you that it’s safe to intersect into the parking lot, and when you pull out from your lane, he speeds up and rams your vehicle. Since the scammer is in the right lane and you are pulling out, you will be labeled the cause of the crime as there will be no proof that the scammer waved at you to signal that it is safe to pull out.
- Sideswiped car accident: This happens most times when you are distracted while driving on a bending road, then the auto insurance scammer purposely turns into your vehicle, thereby causing an accident.
- Start and stop: This scam happens a lot when the traffic light is on the go sign. The scammer starts his vehicle and then moves but immediately stops causing you to bump into him from behind.
How to avoid staged accident scams
Here are some tips to consider to avoid being a victim of a staged car accident:
- Don’t drive closely: Avoid tailgating the vehicle in front of you when driving. Make sure there is enough distance between both vehicles (while on the highway, give at least three car lengths, and on city roads, one car length). This gives you access to apply your breaks even if the driver in front tries to stop abruptly.
- Steer clear when you see reckless drivers on the road: In addition to leaving enough space between your vehicle and the one in front, stay clear of reckless drivers when you want to change your lane or pull out.
- Be a safe driver: Always drive in a more proactive manner. When coming from the parking lot to the road, ensure that the surrounding is free from drivers that might ram you. Before you intersect, make sure the road is clear.
2. Invented or exaggerated damage
Scammers also invent or exaggerate damages to their vehicles. This scam is not limited to just stages accidents, but also those involved in a real accident can exaggerate the damage done to their vehicle or even invent new damages to make it look worse.
How invented damages scam works
Scammers who stage an accident can invent new damages and also exaggerate the damage done to their vehicle so that they increase the amount they file in their insurance claim. Also, people in a legitimate accident can use the situation to their advantage and cause more damage to their vehicle to increase the insurance claim.
Scammers can also file a claim, including a ghost injured passenger, just to increase the money their auto insurance company will give them for coverage.
How to identify exaggerated or invented damage scams
There are ways which you can use to identify an exaggerated or invented damage scams to avoid being a victim of an auto insurance scam:
- Involve the police first: Once an accident has occurred, the first step you should take is to call the police immediately. This will help you as the police officer writes down an official police statement to reduce the chances of the auto insurance scam inventing new damages.
- Inform your Insurance company of any accident: Inform your insurance company immediately after you get involved in an accident. This is because they will protect your interest by providing you with guidance.
- Take a headcount of accident victims: Take a headcount of all the affected passengers after an accident. If possible, take their names, phone numbers, and any other relevant details on the passengers so as to prevent ghost passengers from making insurance claims.
- Take pictures of the damages: This will validate or serve as more evidence to the actual damage the accident caused to a vehicle and its passengers after the police have taken an official statement. These images will serve as proof against invented or exaggerated damage scams.
- Gather witnesses for the accident: Get witnesses that were around when the accident occurred. Get their information so that, if need be, you can contact them to witness against the invented or exaggerated vehicle damage.
- Don’t trifle little damages: Take note of all the above-mentioned tips to avoid auto insurance scams even if the accident is small. Always involve the police to file an official statement, inform your insurance company, and take a picture. All these are to prevent the auto insurance scammer from exaggerating or inventing damages without you having strong evidence to counter his fake claims.
3. Claims on expensive or rare vehicles
Auto insurance scammers can make claims for expensive or rare vehicles just to receive a huge coverage fee.
How rare vehicle scams work
An insurance scammer can insure a fictitious expensive vehicle with an insurance company, then later make a claim that the fictitious car was stolen so they can get a huge amount for coverage.
Auto insurance scammers can also have an actual expensive or rare vehicle, then either hide it, get someone to steal it, sell it to an international buyer, or auto body shop where the auto insurance company can’t find it.
Most times, the scammers eventually go home with the money for two cars, one that was claimed to be stolen but sold and two the money that was given to him by his auto insurance company for coverage.
How to identify rare vehicle scams
If an auto insurance policy holder drives his vehicle in an expensive and high theft part of the country but registers his car in a state with a low premium and low theft rate, then an auto insurance scam might be on the way.
How to avoid expensive or rare vehicle scams
Before an insurance company gives out any money for stolen car claims, they should get a private investigator to look into the claims.
4. Rental car scams
Unsuspecting customers in a rental contract also fall for car rental companies scams.
How rental car scams work
Some car rental companies may decline to give out their car to you for rentals if you refuse to buy their insurance. This scheme is done to scam unsuspecting customers so that they can pay a double premium. If you have a collision insurance or comprehensive insurance coverage, it automatically covers the risks of both your car and a rental car. Rental companies asking you to get their insurance premium you already have covered just want to get free premium insurance payments.
Some other car rental scams involve the scammer creating a fake car rental website that then asks you to preorder or pay in advance for the car of your choice. They actually have no intention to rent out cars to their customers, all they do is take your money.
Also, rental companies may exaggerate or invent damages claiming you did it to their vehicle while it was in your possession so as to get paid. They may also add charges for this, like gas or GPS navigation.
How to identify a rental car scam
If you have made it clear to rental companies that you have a comprehensive insurance or collision insurance that covers both your car and rental cars, and the car rental company still insists that you pay for coverage, they probably want to get an extra premium with your money.
Look out for pushy agents who want you to pay for car rentals immediately. If you feel a car rental agent is pressurizing you to sign up and make payments for a car rental without you reading the policy and what it entails, beware as it might be an auto scam.
Also, if car rental websites ask you to preorder or pay in advance for a vehicle online, it is likely to be a scam car rental website.
Here are some insurance coverage a car rental company would want you to buy before giving out their car to you for rent:
- Collision damage waiver: This coverage provides additional protection to rental vehicles in case of theft or damage.
- Supplemental liability protection: This insurance policy covers injuries caused by the policyholder on other drivers.
- Personal accident insurance: This insurance policy provides coverage against disability or death of the policyholder.
- Personal effects coverage: This insurance policy provides coverage against theft or loss of the policyholder’s personal belongings.
How to avoid rental car scams
Here are some tips to take to avoid rental car scams:
- Request to speak to the manager of the car rental company: In most states in the U.S, it is against the law for rental companies to ask you to pay for an insurance coverage before renting a car to you when you already have an existing policy that covers rental cars. Request to speak with the manager of the rental company or the appropriate authority if faced with this issue.
- Speak with your insurance company: Speak with your insurance company before renting a car to know how much coverage your insurance policy offers for rental cars.
- Know what your existing insurance policies cover: You should know what your auto insurance policy covers so you don’t go paying for a rental car coverage when your insurance policy already has it covered.
Falling victim to auto insurance scams can cost you more money on your monthly premium and also give you a bad driving record when it comes to damages caused by your vehicle, and nobody will want this. So as not to fall victim to any auto insurance scams, we listed some of these auto insurance scams and how to avoid them.
DRIVE SAFELY AND AVOID BEING SCAMMED.