Insurance is seen as quite intimidating for ordinary people. Scammers see this as an opportunity and try to get the best of you by confusing you even more with the complicated insurance policy. Fortunately, there are so many organizations that work together to avoid and prevent insurance fraud. One of these organizations, ZeCoverage is a leader in the sale of insurance policies online.
What is insurance fraud?
The deception committed against an insurance company for gaining money illegally is known as Insurance Fraud, according to the Insurance Information Institute (III). Insurance fraud can be of two types:
Hard fraud is when a person intentionally loses money, property, or service to claim a payout from the insurance company; for example, planned destruction of property such as burdening down of a building that the culprit owns or planned auto theft.
Soft fraud is when a person uses exaggeration on certain parts of a claim to escape paying money or get a lower offer. For example, you lie when you apply for a car insurance policy to get a lower rate.
How scammers make money on auto insurance:
Vehicle dumping or “owner give up.”
The car owner gets rid of their vehicle by disposing of it somewhere, selling it, dumping it in a water body, or sometimes even burning it. After this, she or she will claim that the vehicle was stolen and ask for insurance to cover the costs.
A defective airbag replacement:
Sometimes the mechanic will not replace your airbag in the car after you get into an accident. Most of the time, scammers use old or already faulty airbags to replace your previous ones. They do this to create the assumption that the airbag has been deployed to increase the payout for car insurance. Another way is by attaching a deployed airbag to a non-deployed steering wheel.
False registration:
The place you live in has a significant impact on how much you have to pay for car insurance. Scammers often live inexpensive parts of the country to register their cars in that area and pay a lower insurance premium. The insurance rate is lower in these areas before a very high level of theft.
Replacement for defective windshield:
Scammers can claim to be professionals at replacing windows. They will come up to your car and “asses” the damage of your “faulty” windshield and ask If you want a replacement. They also claim that all the costs will be covered by insurance. These fake windshield specialists have the potential to put your auto insurance coverage at high risk by submitting your details under false claims.
False or exaggeration of repair costs after getting in a car accident:
Repair shop owners are usually the ones who are scammers. Mechanics typically fix broken cars by replacing their parts with old or used parts. After this, they send the repaid bill to your auto insurance company claiming financial support for new car parts. Sometimes they may also overcharge a customer by billing them for repairs that are not necessary.
Agent Fraud:
From the time that you win your car, you are the newest target for scammers. As soon as you buy your first car, you become a target for auto insurance scammers. If your insurance agent is dishonest, they can steal all the money you paid to cover insurance. Some other agents go for another approach and get you to pay a lot more for the insurance than is necessary. In this way, they also earn a larger commission from the money that you spend. It is recommended that you vet your agent thoroughly before signing any agreement with them.
Claiming insurance on fake injuries:
If you run into a person in a rush, you may end up surprising them or leaving them shaken up. If they decide to claim injuries inflicted by you, you can be sure that the person is trying to commit fraud by claiming to be injured for financial gain. People make fake injury claims a lot because the insurance premium increases. Typically, you will see parents falling victim to such frauds because scammers see them as impatient targets who want to get the tasks over with while also being distracted by their kids to pay close attention to the details.
Fraudulent Car Repairs
Unethical mechanics have the power to charge extra money to the owners of the car by claiming replacements and repairs in parts that do not need them. They may even replace your good parts with old and used parts, which will destroy your vehicle. Mechanic scammers fool the public into believing that they are the experts and hence, listening to them will give your car and insurance policy a much smoother deal.
Fake accidents
This method requires a lot of time, effort, and attention to detail. Scammers will even go to the extent of buying a mannequin to bear witnesses to the “accident.” You can even have fake eyewitnesses, advisors, and doctors.
How to stay protected from car insurance scammers:
Be a responsible driver:
Try to keep a reasonable distance between you and the car in front and behind you, so you don’t have a chance of hitting their vehicles at all.
Remember to ask for an official report:
Always remember to call the police or a higher authority even if you get into a minor accident. When you have an official report, scammers cannot do anything to dispose of their car for a more considerable financial gain.
Don’t forget to take proof:
When you find yourself in a tricky car insurance policy, make sure to try and get as many pictures as you can or even videos to document the extent of the damage. This will give you leverage against a scammer trying to get the most out of your money or even steal the money you have.
Keep your insurance company updated:
If at any point you start to get suspicious of insurance frauds, contact your insurance company immediately. Let them know what is going on so that they can be extra cautious.