Insurance coverage is fundamental, as it shields from any eventuality. But, with the evolution of types of covers and the need to have an affordable one, scams have developed that target the consumer. Cheap insurance covers have been forwarded to lure consumers into adopting the fraudulent policies, which end up costing the consumer dearly. The cheap insurance policies are majorly forwarded by brokers and middlemen, who target unsuspecting consumers trying to save on the cover they take. It is therefore up to a consumer to be careful when adopting the cheap insurance policies as they may prove to be scams.
Susceptible insurance policy covers
Cheap insurance covers are offered on the niches that define daily living. Fraudsters target these niches since individuals cannot do without them. Some of the susceptible insurance policies to keep an eye out for include the following.
Auto insurance
With auto insurance, scammers target unsuspecting consumers by appearing to be brokers offering them a cheaper policy compared to what the threshold that regular insurance companies offer. Once a consumer is hooked, they go ahead and buy an authentic policy with clear payment details and maintain it for the required duration until a proof of insurance card is issued. Once the card is issued, the brokers vanish without a trace, leaving a car owner in distress.
A different auto insurance scam involves rate evasion, whereby an insurance broker applies for a policy in a state where the rates are lower, as compared to the state where a car owner resides in. With this, car owners may live in a particular state but have their car bearing license plates from a different state.
Health insurance
Cheap health insurance presents itself as a risk to the individual taking the policy, since coverage against medical eventualities may be in jeopardy. Brokers advertising cheap health insurance are culpable when it comes to failing to disclose actual coverage for an individual. With this, an individual may find that the policy they have can fail to cover specialized care and may even be cancelled when emergency referral of patients to expert care is recommended by an attending doctor.
Another scam experienced with cheap health insurance is when phantom billing is done, where a broker in cohort with the insurance company bill the relatives of a patient when it is clear that the relatives are not the ones who have received the service.
Home insurance
Home owners targeting cheap home insurance policies should be very careful, as some insurance companies and brokers target them for scams. A scam involving cheap home insurance is where an insurance company offers an unbelievably cheap cover only to inflate the prices when it comes to the cost of renovations evaluated by their home inspectors. With this, they increase the square footage and work in cohort with home appraisal agents to increase the cost pricing out a home owner.
Cheap insurance policies can be attractive to the eye but be fraudulently structured to enrich the pockets of brokers and unscrupulous business individuals in the insurance industry all at the expense of a consumer. Individuals should therefore be careful when choosing that cheap insurance cover, as it may prove to be a scam.
Article sources
http://www.financialsamurai.com/how-insurance-companies-and-appraisers-scam-their-customers/
https://theintercept.com/2015/05/23/insurance-scam-fleeces-poor/
https://www.fsco.gov.on.ca/en/auto/brochures/Pages/brochure_scams.aspx