Insurance scams are not fairytale stories, a lot of people have fallen victim in the past as a result of dealing with the wrong insurance broker or getting mixed up with agents that do not have your best interests at heart but only interested in the commissions that he can get out of you.
Of course, there are tons of reliable insurance brokers out there but there are also a lot of crooks so you would have to carefully search for the good ones and then know how to spot and avoid the crooks. Here are some tips to help you avoid insurance rip offs, scams and frauds-:
10 Tips to Avoid Being Ripped Off By Insurance Agents and Brokers
1. Don’t let your premiums get stolen-: Beware of insurance agents who would ask you to pay your premiums in cash. This might lead to the agent pocketing your hard earned money. Never pay your premiums in cash and do not make out cheques to your insurance agent either.
Instead, all cheques should be made out in the insurance company’s name. You should also ensure that you have photocopies of all cheques you issue to your insurance agent. If the agent wouldn’t allow you pay with cheques or address it to the insurance company, then you should really find another agent.
2. Recognize and avoid insurance churning-: Look, insurance agents are after their commission; that’s how they earn their living and don’t be mad when they engage in crooked means to pull that commission off you. One of the ways they do this is through insurance churning; you already have your whole life insurance policy building up cash value and then the insurance agent comes to you, trying to sell you an ‘upgrade’ which would make you lose your cash build up and have you start all over again.
The annoying part is when you discover that your previous policy was sufficient in the first place. Most agents do this so that they can keep earning commission off you. It is better to have a financial manager or consultant whom you would approach for advice and support before you buy or upgrade your insurance policy.
3. Avoid policy sliding too-: Another tactic used by the commission-hunting insurance agent is to slip in some additional policy coverage into your package without your knowledge or approval. This is called policy sliding and would increase your premium rates by a couple of dollars. You should never be hesitant to ask questions and demand explanations when you don’t understand anything; don’t allow anyone to bully you into buying anything you don’t need. It’s your money and you have a right to know how it is being spent.
4. Increase your knowledge-: Information is power and that cannot be over emphasized in insurance. When you know and understand a lot about insurance, it would be difficult for a jargon-speaking agent to rip you off your hard earned money. You can always come to this website to learn more about insurance, you can also read books, surf the internet and ask questions to update your knowledge of the insurance industry.
5. Make Comparisons-: There is no rule that says you have to buy from the first insurance agent you come across. It doesn’t hurt to consider one, two or three agents and carefully scrutinize them to select the one you are most comfortable with. Another comparison you have to make is that of price and product. Ensure that you compare policies and premium rates to settle for the one with the best price and adequate coverage.
6. Get to know your agent-: You don’t even want to know the number of people who suddenly discovered during the process of filing their claims that they do not have any insurance coverage whatsoever because they have been scammed by their insurance agent.
These things happen all the time but guess what; it shouldn’t happen to you because you now know that you have to carefully scrutinize your insurance agent, look into his background, check out his staff, look at his license and ask for reviews and references before you commit yourself. It doesn’t matter if your premium is just $20 per month; you shouldn’t be giving that $20 to someone who doesn’t deserve to have it.
7. Get your receipts-: Fine, it may take days to get a receipt but make sure you do collect them and file them appropriately. Your receipt is your evidence of payment and evidence that you have a contract with the insurance company through the agent. Therefore, you must obtain all your receipts and they must be issued by the insurance company and not the agent.
8. Have your policy document-: Make sure you have a copy of your insurance contract stating the extent of your coverage and limitations. This document is also a proof that you have insurance coverage and a contract with the insurance and you should ensure that you get it from your insurance agent.
9. Prevent Up coding-: Do you know that health care insurance frauds amounts to billions of dollars each year? Up coding in insurance is used to describe a situation where you are billed for services you didn’t receive especially in health insurance. To avoid this, ensure that you obtain your explanation of benefits and carefully review it to ascertain that it only contains billing for services you have received.
10. Avoid Car Insurance Scams-: There are several auto insurance scams out there that you should protect yourself against. Some popular ones include-:
- Crash for Cash-: In this situation, an accident is staged. A driver might intentionally cause you to hit the rear end of their vehicle so that they can obtain compensation.
- False injuries-: This kind of scammer, after staging an accident would also claim false body injury with the assistance of shady doctors who would cooperate and corroborate the claims for a share in the insurance payouts.
- Accident help-: In this case, you might actually be involved in an accident but a fake representative of the insurance company would call you to recommend a doctor or auto repair shop to visit all in a bid to get money from your insurance company for services you didn’t even receive.