Beware of these 4 home and auto insurance scams

Watch Out For These Scary Insurance Scams

Beware of these 4 home and auto insurance scams

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This Halloween, you’re ly to encounter vampires, zombies and ghouls. But don’t worry about them—they just want a candy bar. What you really need to be on the lookout for are hackers, scammers, bandit tow truck drivers and other fraudsters looking to separate you from your hard earned money.

This rogue’s gallery of villains costs the average U.S. family between $400 and $700 per year in increased insurance premiums, according to the Federal Bureau of Investigation.

But here’s the scariest thing about scammers: They look everyone else. They don’t wear pointy witch hats or shreds of wraps a mummy. Instead, they look roofing contractors, and everyday tow truck drivers, and sometimes they’re the voice on the other end of the phone or behind an email waiting in your inbox.

You can be the victim of fraud any time of the year. But this Halloween season, while you’re on the lookout for classic monsters and slashers, it’s a good idea to familiarize yourself with a few other fiends lurking in the shadows.

The Wolf Dressed in Contractor’s Clothing

In the aftermath of heavy thunderstorms and hurricanes, scammers dressed as legitimate contractors prey on damaged neighborhoods with plans to run roof repair scams. The National Insurance Crime Bureau (NICB) warns consumers to watch out for fraudulent contractors hoping to take advantage of vulnerable people.

The typical scam works this: Let’s say a severe hail storm hits your neighborhood and damages your roof. You are contacted by an unsolicited person (sometime they’ll knock on your door) who claims they are a contractor.

They’ll often come in with a low-ball bid and pressure you to sign a contract on the spot or pay cash up front. Sometimes the scammer skips town with your payment.

If they actually start repairs, it’s often shoddy or incomplete work with substandard materials.

Here’s how to avoid this type of scam:

  • Coordinate with your insurance company. Make a home insurance claim for roof damage and have your adjuster inspect the damage. If a contractor completes the repairs before your adjuster gets to look at it, your claim could be denied and you could be stuck paying out-of-pocket.
  • Get more than one estimate. Don’t let a contractor pressure you into signing a contract.
  • Work with licensed and insured contractors. Ask to see the contractor’s liability insurance and check that the policy effective dates have not expired.
  • Research your contractor. Check if they’ve had any complaints with the Better Business Bureau, ask for client references, and check to see if they are a member of any local, regional or national roofing industry associations.
  • Get a signed contract before the contractor begins any work. The contract should specify the cost, time schedules, payment schedules, and any other guarantees or expectations. Do not leave any portion of the contract blank.
  • Do not pay in cash. Pay by check or credit card. Pay in full or sign a completion certificate only when the work is completed to your satisfaction and meets local building codes.
  • Contact local authorities if you suspect a scam. You can contact the NICB or your state’s insurance fraud bureau.

The Ghastly Jump-In Passenger

Here’s a scheme that might make you believe in ghosts: After an auto accident, someone who wasn’t in the other car files an injury claim against you. In fraud-speak, this is called a “jump-in” and it’s a common scheme.

A typical scam works this: You get into a car accident and exchange insurance information with the other driver. There are no witnesses and the police are not called to the scene.

You later find out from your insurance company that a passenger is claiming injuries and hoping to get a settlement from your liability car insurance.

You are positive this “injured” passenger was not in the car.

Here’s how to avoid the scam: With no police or witnesses, it’s really your word against theirs. The best thing to do is collect accurate information at the scene of an accident.

Take pictures with your phone. Get a head count of everyone involved in the car accident, including drivers and passengers. If possible, get the names and contact information from everyone involved.

If there are any witnesses at the scene of the accident, ask for their contact information. You can also call the police and ask them to file a report.

If you believe someone is making an injury claim against your insurance and they were not involved in the car accident, speak with your claims adjuster. Most car insurance companies have an investigative unit that look into these types of problems.

Bandit Tow Trucks on the Prowl

There are plenty of unwelcome incidents that can leave you stranded on the side of the road, a dead battery, flat tire or car accident. To make matters worse, there are unsolicited tow truck drivers waiting for the opportunity to cash in on a bad situation.

These drivers swoop in saviors at the accident scene, only to hit you with an inflated bill. The NICB has issued warnings for drivers to be on the lookout for bandit tow trucks.

Here’s how the scam works: Your car is disabled from a car accident and a random tow truck driver shows up. Shaken up from the accident, you sign a blank document authorizing the tow, then the driver adds other charges for services that weren’t necessary or may not have been performed. You get stuck with a big bill.

Here’s how to avoid the scam: If you or the police did not call the tow truck, don’t deal with the tow truck operator and never give permission to an unsolicited tow truck to take your car.

Before you hook up with a tow truck, make sure you get a printed price list, including daily storage fees and any miscellaneous charges that might apply.

If the prices seem too high, ask the police or your insurance company to call a towing service for you.

Another good way to avoid bandit tow truck drivers is to get roadside assistance insurance, which you can get through your auto insurance, credit card or an auto club such as AAA.

Your inbox is most ly full of unsolicited emails with catchy headlines trying to catch your attention. But in uncertain times and a global pandemic, fraudsters are using tried and true techniques to steal your personal information, phishing, spoofing, spam and robocalls with a COVID-19 twist.

Here’s how the scam works: An email has a coronavirus-theme, such as access to a vaccine, treatment, antibody tests or, in some cases, that appear to come from the Centers for Disease Control and Prevention. These emails prey on your anxieties in hopes that you click on a link and download malware that can then steal your personal information from your computer.

A similar strategy is used for text messages and robocalls. Scammers often use spoof phone numbers to trick you into responding to the text or answering your phone.

Here’s what you can do to avoid the scam: Don’t open emails from people you don’t know. Be wary of any links or attachments and do not give away any personal information (such as passwords or banking and credit card information) in an email.

If you get a text or phone call from an unfamiliar number, it’s best not to engage. Don’t click on any links in a text and do not supply your personal information over the phone. Government agencies will never call you and ask for money or personal information. The Federal Trade Commission has samples of COVID-19 text scams and robocalls.

You can also bolster your defense against cyber attacks and cover certain expenses to restore a stolen identity by purchasing identity theft insurance.

This coverage helps pay for expenses legal fees or lost wages if you need to take time off from work to restore your identity.

You can typically get identity theft insurance from home insurance companies, your credit card company or identity theft protection companies.

Also, personal cyber insurance can cover financial losses and expenses from cyberattacks data breaches, online fraud and cyber extortion. It’s available from some homeowners insurance companies.


6 Types of Car Insurance Fraud |

Beware of these 4 home and auto insurance scams

Car insurance fraud is when someone lies to the insurance company for financial gain. Even if you never find yourself in the middle of one of its sleazy scams, car insurance fraud affects you. Industry experts say these insurance scams slow legitimate insurance claims, increases premiums and, in some cases, put innocent victims in danger.

Law enforcement officials say fraud factors into as many as 1 every 3 car insurance claims in New York City. The problem may be even worse in Los Angeles, the city that generates the most questionable claims potentially linked to organized crime, according to the National Insurance Crime Bureau.

Another group, the Coalition Against Insurance Fraud, that specializes in tracking insurance frauds has reported that the top five states for fraudulent car claims are Michigan, New York, Florida, Massachusetts and California.

The cost of insurance scams to motorists is tough to pin down because fraud often goes unreported, but it’s a “major-league crime involving a wide variety of schemes,” according to  Jim Quiggle, a spokesman for the Coalition Against Insurance Fraud in Washington, D.C.

In New York City alone, officials estimate that fake car claims add $241 million to premiums. Nationally, experts believe overall insurance fraud costs tens of billions of dollars every year.

Learn how to protect yourself from the worst car insurance frauds.

Counterfeit air bags

Each year, about 1.5 million air bags inflate during crashes, saving thousands of lives. During the repair process, at least a small percentage of those deployed air bags will be replaced with counterfeits — which can be life-threatening.

“Crooked repair shops frequently replace the bags with cheap knockoffs, or in some cases just fill the area with junk and garbage,” says Quiggle. “The insurer pays for phony work, and the driver ends up with a car that isn’t safe.”

If your car needs repairs after the air bags have deployed, work with a trusted, reputable mechanic, says Quiggle. He advises drivers to go with shops that have been approved by their insurance company because those will have been heavily vetted.

If you’re buying a used car, get a vehicle report, which will tell if the car has been damaged in a crash or has been salvaged. Then, pay close attention to the air bag light, which should appear briefly and then turn off. If the light never appears, if it flashes steadily or if it stays on, have the car inspected immediately.

Staged accidents

Staged accidents are rising at an alarming rate, according to the National Insurance Crime Bureau. Insurers across the U.S. reported a 102 percent increase in suspected cases of this type of fraud from 2008 to 2011, the bureau says.

The National Insurance Crime Bureau says common types of staged crashes include:

  • Swoop and squat: Two vehicles trap a victim in a rear-end collision.
  • Drive down: When waiting to make a left turn, the victim is lured into turning early by an oncoming fraudster who waits and then proceeds to collide with the victim.
  • Wave down: Two vehicles set up a crash with a victim who’s given a wave that it’s safe to pull a parking lot or side street.
  • Enhanced damages: In a legitimate accident, the not-at-fault driver causes additional damage to his or her own vehicle to pump up the claim.
  • Panic stop: A vehicle intentionally watches for the car behind them to become distracted and then slams on their brakes, causing the tailing vehicle to rear-end them.
  • Side swipe: A driver positions themselves so they can sideswipe another car that is using the inner left-turn lane of a dual left-turn lane intersection.

Florida lawyer Russel Lazega advises anyone who has been in a wreck to gather as much evidence as possible right away.

“Often car crash cases don’t make it to court until years later, when witnesses are gone and cars have been fixed,” he says. “Demand a police report, take lots of pictures and get the contact information for any witnesses.”

Agent fraud

Most agents are honest, but if you buy your car insurance coverage through an agent who isn’t on the up-and-up, it can cost you.

The Coalition Against Insurance Fraud says one of the worst-case scenarios involves a shady agent who steals your premiums. The unscrupulous agent pockets your money and doesn’t set up the coverage, so when an accident occurs, you find that you have no insurance to pay your claim and must cover the loss on your own.

To avoid premium theft, drivers should work with trusted agents and always verify their coverage independently with the carrier.

Also common is a practice known as “sliding,” in which an unethical agent slips extra coverage that you didn’t want into your policy. This particularly sneaky form of car insurance fraud can add a few hundred dollars a year to your premiums while padding the agent’s commission.

Vigilant drivers who investigate their agents ahead of time and keep a close eye on what they’re buying won’t fall victim to sliding scams.

Windshield replacement rip-offs

A stranger approaches you at a parking lot and says he’s with a vehicle glass company. He tells you that you need a new windshield, which he can provide free of charge if you provide your insurance information. Sounds good, right?

Well, it’s probably too good to be true. According to Farmers Insurance, the windshield replacement offer is almost always a scam. And the risks may be greater than many people realize.

First, the quality of the replacement windshield and the repair work usually aren’t good, which means you could be putting your safety at risk. This scam also can do a number on your insurance coverage, says Quiggle.

“Once they have your insurance information, a scammer will often submit false claims under your policy,” he says. “You’ll have to go through the headache of clearing up those false claims, but in the meantime, they can raise your premium and — if there are enough false claims — you can even lose your coverage.”

Experts say the best thing is to walk away from the offer. If you do need your windshield replaced, call your insurance agent in advance to see what is and isn’t covered.

At first glance, a friendly tow truck happening by after an accident or breakdown can seem a godsend. But if you didn’t call for a tow, there’s a good chance it’s what authorities call a “bandit” tow truck, which means you’ll get your tow and an eye-popping bill.

There are a couple of easy ways to protect yourself. If you have AAA or belong to another roadside assistance program, that’s where you should turn when you need a tow because you’ll benefit from lower pre-negotiated rates.

Your car insurance policy may also offer roadside assistance. If you use it when an accident renders your vehicle undriveable,ask about the policy’s limits on towing and storage before you leave the scene.

If you must use an independent tow truck, call for one rather than go with a truck that is passing by. It’s also critical that you read the fine print before signing any towing contract. Experts say you should get a printed price or invoice of all towing and storage charges and any miscellaneous fees. The contract also should specify to where your vehicle is being towed.

Car insurance premium evasion

Policyholders are not completely innocent when it comes to insurance scams.

The Insurance Information Institute, a New York-based trade group, says some customers deliberately mislead insurers by using a false address from a lower-premium area when registering their vehicles.

A related car insurance fraud is deliberately failing to add a new driver in the household, typically a teenager, to the family policy.

The institute says these sorts of lies and omissions cost the car insurance industry as much as $16 billion a year.

In theory, premium evaders could go to jail for fraud, but it’s more ly they’ll lose their car insurance coverage, says Thomas J. Simeone, a Washington, D.C., lawyer who specializes in liability issues.

“Any intentional misstatement on an insurance application can definitely lead to a policy being canceled immediately and a claim being denied,” says Simeone. “Moreover, the insurance company may seek to recover any previous claims paid before uncovering the false statement.”

How to avoid car insurance fraud

Knowing that car insurance fraud exists is the first step. To protect yourself, you’ll want to know how to avoid these scams. Nationwide provides these tips on how to avoid car insurance frauds.

  • Avoid tailgating so that criminals can’t take advantage of the situation to cause an accident.
  • Report all accidents to the police and get a police report, no matter how small the damage is, so criminals can’t damage the car to get in bigger claim.Document any details of the accident. Take pictures of any damages, the passengers and the accident scene after an accident. Write down names, addresses, license plate numbers, driver’s license numbers, witnesses and anything you remember about the accident.
  • Find your own doctors and lawyers. Don’t use people who come up to you at the scene of an accident. If a doctor suggests filing a personal injury claim even if you’re not hurt, be cautious.
  • Tell your insurance provider about the accident as soon as possible.

Remember, when in doubt, always contact your insurer.

What happens if you lie on an insurance application?

Lying on an insurance application is a form of fraud and is punishable by fines and potentially jail time. Not only that, but your insurer may increase your rates and impose a financial penalty of their own.

How much jail time can you get for insurance fraud?

How much jail time you get depends on the severity of the fraud. For a misdemeanor fraud, you could get up to a $15,000 fine and up to five years in jail. For a felony fraud, you could get up to a $150,000 fine and as much as ten or more years in prison.

How do I report suspected car insurance fraud?

Immediately call your car insurer or the National Insurance Crime Bureau (800-835-6422).

How can I recognize car insurance fraud?

Use the guidelines outlined above to help you identify potential car insurance fraud. When in doubt, contact your car insurance company or the National Insurance Crime Bureau (800-835-6422).


Auto Insurance Scams To Know And Avoid | DarrasLaw

Beware of these 4 home and auto insurance scams
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Auto insurance fraud isn’t something we think abten, but it’s ly it could happen to you.

Auto insurance fraud incidents are believed to cost $20-30 billion nationally every year. This translates into $200-300 in additional insurance premiums each year for those affected.

California, Florida, Texas, New York and Maryland are the top five states for fishy auto insurance scams, but you’re at risk no matter where you live.

Fast Facts

  • Insurance companies in the U.S. have reported a 102% increase in suspected cases of staged accident fraud from 2008 to 2011
  • These scams are often conducted by organized groups that work in teams and use multiple vehicles and drivers
  • Their goal is to trick you into forking over cash to pay for the damage    and to defraud insurance companies by filing false injury claims from fake accidents

Common Scams & Staged Accidents

The Swoop and Squat

How it happens:

  • The scammer will slow down or stop in traffic, at an intersection or on-ramp, or swoop in front of you
  • This causes you to crash into them from behind, putting you at fault as the rear driver

How to avoid it:

  • Don’t follow other cars too closely and always allow plenty of room to stop quickly

The Bad Samaritan

How it happens:

  • After getting in an accident, you’re approached by someone posing as an insurance official or consultant, who will convince you to go to a certain body shop, lawyer or health clinic
  • This is a set-up to get your information and use it to file false insurance claims

How to avoid it:

  • Conduct all necessary business with your insurance company and the other driver’s insurance company
  • Don’t give any information to anyone else during the post-accident process

The Fake Injury

How it happens:

  • You get in an accident and the driver immediately reports back pain, whiplash, etc.
  • The driver seeks hospitalization and files a claim with your insurer to cover expenses
  • Scammers will choose injuries such as whiplash that are hard to display on X-rays and may pay off medical professionals to corroborate their injuries and ensure a payday

How to avoid it:

  • Pay attention to the dirver after the accident. If they act fine, but start acting injured after the police show up, this scam is probably happening
  • File a police report, even if it’s a minor accident, so you have an official record of what happened

The Phantom Victim

How it happens:

  • The other driver will attempt to file injury claims for additional passengers in the car, even if there were no passengers

How to avoid it:

  • When gathering information after the accident, make sure to also document and photograph the passengers in the car
  • Get the name, address & driver’s license number of all occupants
  • If someone files a false claim for a nonexistent passenger, report the fraud; you’ll have documentation to support your case

Other Staged Accidents

  • The drive down: When waiting to make a left turn, someone who has the right of way waves you into traffic and then rams into the side of your car, merging into traffic as you do
  • The sideswipe: A driver intentionally rams your car if you drift into the outer lane when turning at an intersection from the inner lane of a two-lane zone
  • The wave down: Two vehicles set up a crash with a victim who’s given a wave that it’s safe to pull a parking lot or side street
  • Enhanced damages: In a legitimate accident, the not-at-fault driver causes additional damage to his or her own vehicle to pump up the claim
  • Paper accident: An accident that only occurred on paper; the claims are usually made for property damage

If you get in an accident

  • Gather as much evidence as possible right away
  • Always call the police, regardless of who is at fault or amount of property damage
  • Make sure official police report is filed, even if damage is negligible
  • Take lots of pictures
  • Get the contact information for any witnesses
  • Immediately notify your insurance carrier

More Resources

Video illustrations of staged accidents

How to report suspected fraud

Accident and Fraud Prevention Checklist and Towing Information


Beware of these 4 home and auto insurance scams

Beware of these 4 home and auto insurance scams

No one wants to be the victim of a scam. Unfortunately, they’re more common than you might think — particularly in the insurance world.

According to the Insurance Information Institute, insurance fraud scams result in about $40 billion in losses every year — losses that insurance companies, taxpayers, and the victims of these scams are forced to pay for (about $400 to $700 per household annually).

Whether you have or need home insurance or auto insurance, you should be aware of these scams and how to protect yourself. Fortunately, there are several signs that make them easy to identify.

Watch out for these 4 home and auto insurance scams

Want to make sure you don’t fall victim to one of these scams yourself? Here’s what to be on the lookout for:

  1. Unsolicited contractor and repair offers
  2. “Free” windshield repairs offers
  3. Phone calls and emails selling you a new policy (or saying your insurance has expired)
  4. Exaggerated damages or injuries

1. Unsolicited contractor and repair offers

According to Paige Schaffer, CEO of global identity and cyber protection services at Generali Global Assistance, these scams often crop up in areas hit by big storms or natural disasters.

“Victims of hurricanes or other natural disasters are often preyed on by scammers,” Schaffer said. “Fraudulent contractors will go knocking on doors, providing low-ball estimates for repairs and then enticing unsuspecting homeowners to sign a contract and put down a deposit.”

Sometimes, the contractors run off with the deposit and never put in the work, and in others, they may provide shoddy service or poor quality materials. They may even overbill the insurance company and pocket the rest.

To prevent these scams, it’s important to shop around for home repairs and always do your research on contractors you’re considering. If you want to see what kind of homeowners insurance options are out there, head to a trusted site Credible. Credible makes it easy to compare quotes, saving you both time and money.

“Regarding home repairs, make sure to get more than one estimate,” said Marissa Sweet, a commercial property and casualty insurance consultant at PropertyCashin.

“Also, we highly suggest staying in close contact with your insurance company through the claims process.

You can also do a search on the contractor for licensing history and lookup online how long they have been in business. Asking for references can be very helpful.”


2. “Free” windshield repairs offers

“Windshield repair stops along the side of the road are another example,” Sweet said. “They often state it will have no effect on an insured but can show up on the loss reports as a claim and, with too many, they can adversely affect you,” Sweet said. “This often results in higher premiums for everyone.”

Though these offers can be tempting, Sweet said it’s critical to speak with your car insurance carrier directly to find out what’s covered and what’s not.

“If someone states they need your insurance info and that they will handle filing a claim, we would suggest you call to verify what the insurance carrier's stance truly is before completing anything,” Sweet said.

If you find out your car insurance doesn’t quite cover what you wanted, consider shopping around for a new policy once your current one expires. Credible can help with this process.


3. Phone calls and emails selling you a new policy (or saying your insurance has expired)

Unsolicited phone calls are another big red flag. Unfortunately, these are often phishing attacks, with the caller looking to get your financial details and steal your identity.

“Identity theft through insurance scams is alarmingly on the rise in the U.S. and around the world,” said Attila Tomaschek, a researcher at digital privacy resource ProPrivacy. “It’s a scam that is becoming increasingly common and one that all home and car owners need to be aware of.”

According to Tomaschek, these callers often use aggressive sales tactics and offer too-good-to-be-true deals. Those that operate via email take a similar approach, presenting their offer as limited-time or urgent.

“The phishing email will be designed specifically to appear official and as though it is being sent by a genuine and well-known insurance firm and will encourage the recipient to click on a link or download an attachment to access the limited-time offer,” Tomaschek said.

“However, the link will lead to a phishing website designed to steal the recipient’s sensitive personal and financial information, and any attachment will typically contain malware that could allow the attacker to take control of the victim’s device to access private data.

If you have any questions about your current policy or are interested in getting more insurance coverage, then Credible can assist (and protect) you to make sure you're not getting scammed cash.


4. Exaggerated damages or injuries

Sometimes, the scam is just an intentional exaggeration of losses by the other party — typically after an accident or some sort of incident has already occurred.

‘Victims of car accidents can also be victimized further – sometimes by the people in the other vehicle who exaggerate or make up injuries or by the repair shop that wants to charge them for repairs that aren’t necessary or even use counterfeit parts that are unsafe,” Schaffer said.

This also happens with home insurance, according to Bill Martin, president and CEO of Plymouth Rock Home Assurance.

“Repairmen or contractors may offer to inflate the cost of the repair service provided to cover the deductible — or just to make more money on the repair themselves,” Martin said. “Remember, there are victims of all overpayments in insurance — and usually, it is the cost for honest people to buy coverage.”

Visit Credible to examine all your auto insurance options – including comprehensive car insurance.


How to protect yourself

Your best protection against scams is skepticism and research.

If you get an unsolicited insurance call, use Credible to compare the caller’s offer to other auto insurance and home insurance rates you may be eligible for.

You should also check out reviews and ratings for the caller’s supposed agency, or even call them up directly (using the number on their website) to be sure the agent is actually employed there.

Finally, if someone says they’ll file insurance claims on your behalf or cover your deductible, be wary, and call your insurer yourself. Chances are something’s amiss.

Want to make sure you’re not paying too much for home or auto insurance due to rising rates of fraud and scams? Credible can help. Get multiple policy offers in minutes with just one quick form.



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