Bosworth & Associates, a Tyler, Texas insurance agency, prides itself on ensuring your financial security. One of our top priorities is a focus on honest service principles in all areas of insurance.
With so many insurance scams out there, we wanted to share some helpful information. Americans are bombarded with advertisements for health insurance, life insurance, car insurance, home insurance, and even pet insurance. It’s easy to become confused by what is legitimate and what is meant to deceive consumers.
At Bosworth & Associates, we are acutely aware that insurance fraud is a very real problem in today's world, especially with the popularity of online insurance. It's easy for scammers to appear reputable online when in reality, they're out to commit fraud.
Insurance scams are a type of fraud and are one of the top financial crimes in the U.S.
Insurance fraud is found in all segments of the insurance industry. From life insurance scams to health and auto insurance scams, fake and fraudulent insurance claims, and predatory/fake insurance providers are crucial aspects to be aware of. Avoiding insurance scams can save you a lot in time, money, and trouble.
According to FBI estimates, insurance fraud costs the U.S. more than 40 billion dollars a year. This then translates to U.S. citizens, meaning the average family now pays $400-$700 per year to make up the difference.
Here's a breakdown of some of the most common types of insurance scams, as well as helpful tips for how to avoid becoming a victim:
Auto Insurance Scams:
Statistics show that up to 20% of physical injury claims and 10% of auto accident claims are fraudulent. As an insurance holder, this means that someone could purposefully involve you in an auto accident to receive money. Your driving record could be affected, your insurance premium could go up, and it could cause you messy legal repercussions. Not only this, but fraudulent accident claims target large and small insurance companies and cause them to raise rates for their clients. Being aware and prepared can help you avoid becoming a victim of auto insurance fraud.
Tips for Preventing Auto Insurance Scams:
- Never follow another vehicle too closely, and always pay attention to what's in front of and around you. Many insurance scams and false insurance claims come about because of what's called a "forced rear-ending" in which a person purposefully causes you to rear-end their vehicle. They might even claim a fake injury to receive more compensation. Obey traffic rules and follow at least several car lengths behind the vehicle in front of you. Such fraudsters often target elderly drivers and women with children.
- Avoid being taken advantage of by a third-party trying to get information from you. If you're approached after an accident, make sure you only go through your insurance company and that of the other driver. Never give out personal information to anyone other than a law enforcement officer and the other person involved in the accident.
- Always file a police report, even for small accidents. Filing a report helps deter people from attempting to file false injury claims.
- Be aware of "Ghost Brokers"—fake insurers who primarily target individuals with higher premiums such as younger drivers. If the price they're offering seems much lower than the competitors, it might be a scam.
- Count how many passengers are in the car, and make sure that's noted in the report. Otherwise, down the road, they might claim insurance compensation for someone who wasn't even in the vehicle.
Health Insurance Scams:
Healthcare fraud is found in every segment of healthcare. The elderly are especially at high risk. With the cost of health insurance rising, consumers are looking for discount insurance but finding themselves left with very little when it’s needed.
Tips For Avoiding Health Insurance and Health Care Scams
- Stay away from aggressive salespeople—this holds true for all insurance. Especially pay attention to whether they use language like "good deals" and avoid if that's the case.
- Be aware of whether the salesperson is trying to rush you. Health insurance is a big decision, and reputable salespeople know this. It's worth it to take your time and make the best decision for you and your family.
- Be aware of the vocabulary. Terms such as discount health insurance, discount or low cost medical discount cards, medical payment plans, medical claims plans, or health benefits insurance, could be fraudulent.
Tips For Avoiding General Insurance Scams
When choosing insurance companies, it's crucial for you and your family to find someone who will provide what they say they will. Take the time to do your research. It will pay off in the end.
- Be careful of companies offering costs that seem significantly less than others. Generally, if it seems too good to be true, it is.
- Listen to your gut—if your intuition tells you something feels wrong or off, turn away from the situation. Too often, we feel pressured by salespeople to make a decision. Trust yourself to know what's right for your family, and if something doesn't feel right, trust that instinct.
- Do thorough research, online and word of mouth, on companies implicated in insurance fraud to ensure the company you're interested in, or that's soliciting you, isn't on the list.
- Research online for a state-by-state compilation of licensed insurance companies. If the company isn't licensed, don't go with it.
- Always obtain a copy of your policy and read it carefully. If there are things you don't understand, have someone you trust read it over with you.
- Make sure that you're submitting personal information to the correct office or entity. Scammers will often use this as an opportunity to obtain your information and use it for financial gain.
If you are in the unfortunate place of having been the victim of fraud, it's very important to report your experience and the perpetrators to your local insurance commissioner.
Despite the prevalence of insurance fraud, you don't have to be a victim. Being aware of the risks and taking your time to research and make decisions accordingly, can go a long way to making sure you don't fall prey to an insurance scam.
At Bosworth & Associates, we are here to help protect our customers. Please be aware of the scams out there and know that we are here to help answer any questions.