Lately, the auto insurance market seems flooded with companies offering to save a consumer money on their insurance. In some areas of New Mexico, it’s common to have over one hundred companies competing with each other. With so many choices, it’s easy for a consumer to feel overwhelmed when he or she is shopping for auto insurance.
Unfortunately, a number of people have decided to take advantage of this confusion and develop scams based on selling auto insurance. Victims of these scams have lost hundreds of dollars.
Because so few people report fraud to the authorities, it is impossible to know the exact number of people who have been scammed by these criminals. As a consumer, however, it is important for you to be aware of these scams and take steps to avoid them.
The first type of scam that has been widely reported starts when an individual pretends to be a properly licensed auto insurance agent or auto insurance broker. This person contacts their victims either in person or over the internet and offers to arrange auto insurance coverage at a rate much lower than what the victim is currently paying or has been quoted.
During the first part of the scam, the con artist charges his or her victim a fee for this so-called “service”. The scam artist them collects information about the victim’s driving history, along with other personal details that in some cases have included financial information.
During the second part of this scam, the con artist gathers information and quotes on the victim’s behalf from actual auto insurance companies. Instead of accurately reporting this information to these companies, however, the scam artist lies to the insurance company about the victim’s personal information and/or driving history. As a result of this false information, the scam artist is able to get a lower rate for his or her victim. In reported cases, it appears that the scam artist typically leaves off information about a person’s vehicle accidents or lies about a person’s age. The scam artist them collects a finder’s fee from the legitimate insurance company.
The victim, till unaware of the scam, usually pays his or her premium directly to the insurance company. He or she then receives a supposedly valid card showing proof of insurance. Unfortunately, because the insurance was obtained under false information, it is not actually valid. Victims usually discover this fact too late, however. In fact, many victims only realize that they do not have valid insurance after being in an accident.
Fortunately, there are several ways for someone to protect his or herself from this scam. To start, never pay anyone to look for auto insurance quotes. All legitimate, licensed insurance brokers receive their money from the insurance company. Next, if you choose to go through a broker, be sure to check out your policy before agreeing to pay a premium. A legitimate broker will allow you to see all of the terms and restrictions on the policy and will take the time to explain them to you if you do not understand something.
In a second reported scenario, victims come across an advertisement in a newspaper or online that promises auto insurance coverage at lower rates than what victims are currently paying. In some cases, the advertisement offers several months of free auto insurance coverage. When victims call the phone number or visit the website, they are given a quote. This quote is usually lower than what the victim is currently paying.
After the victim agrees to buy the insurance, he or she is asked to send either a partial or full payment. These payments are asked for via wire transfer or money wiring service. In a few reported cases, the con artist will make arrangements to meet with the victim in order to accept a cash payment. After handing over the money, the victim is told that their proof of insurance is in the mail.
In fact, the proof of insurance never arrives. The scam artist simply pockets the cash and moves on to the next victim. Fortunately, there are ways to make sure that you are not a victim of this scam. To start, make sure you check out the credentials and license number of any auto insurance broker. Next, always ask for documentation of an insurance quote, and check out the standing of the insurance company with local fraud protection agencies. Finally, pay for a new insurance policy with either a check or a credit card. These methods of payments give you some limited fraud protection that you can use to get your money back.