Battling Insurance Fraud

These scams cost the insurance industry $120 billion year--don't be a victim

Like many owners of auto insurance policies, Tanya Greene, 26, thought for sure that her insurance company would provide coverage when her 1997 Toyota Corolla DX was stolen. But Greene was in for a rude awakening. The company sent out an adjuster who insulted and harassed Greene, a law student at Boston College, with improper questions such as, “What do your parents do for a living?” and “How can you afford to live in this neighhood?” The adjuster even asked for a copy of her parents’ credit report, which was irrelevant since Greene didn’t live with her parents and was the only person named on the insurance policy. ; But because Greene detailed this inappropriate behavior in a written log, in the end she was able to recover $4.000 of her $6.000 claim.

While this may sound like racism, automobile insurance is also one form of insurance fraud, according to Linda Bayless, an associate commissioner of the Fraud Unit at the Texas Department of Insurance. According to the Insurance Information Institute, a nonprofit communications group in New York, fraud cost all sectors of the insurance industry $120 billion in 1995. Consumers should be aware that fraud can increase insurance premiums, so whether you are buying auto, homeowner’s or other insurance, you should take steps, like Greene, to prevent yourself from becoming a victim.

Plan Ahead. Purchasing insurance itself is not enough. “Decide what type of coverage you want and what you can afford in terms of deductibles,” says Holly Cherico, spokesperson at the Council of Better Business Bureaus in Arlington, Virginia.

Shop around. “Don’t make your selection based on price alone,” advises Cherico. Rock-bottom premiums may eventually cost you in the form of bad customer service and refusals to pay claims.

Comparison shop as you would for any other major purchase. Make sure you know your rights under state laws for insurance premiums. Some agents may opt to quote you only the higher-priced plans. .

Get what you pay for. Make sure your policy contains the coverage you’ve selected. Life insurance policies come with a “free-look” period. Take that time to review your coverage and get a second opinion from a reliable source.

Investigate. “Check out the reputation of the agent as well as the insurance company,” advises Cherico. If you buy a policy from an unlicensed agent, you are not protected. Don’t rely on someone’s ID for verification. Get their license number and call your state insurance commissioner’s office to verify an agent’s licensing status. Do not give out any financial or personal information until you do that. “Fake liability cards are a problem for many states,” says Bayless in reference to liability car insurance.

Never pay cash. Always pay your insurance premiums by check or money order. And, if possible, make your check out to the insurance company. Unethical agents will pocket the money, leaving the consumer without insurance. “One of the ways people find out that they don’t have insurance is when they have an accident,” says Bayless.

Beware of government agents. Unauthorized agents who

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