Most people think homeowners insurance scams are easy to spot, but many victims don’t discover the dreadful truth until they try to file a claim. Fraudulent insurance puts you and your family at risk of financial ruin if a catastrophe occurs. Therefore, you must know how to avoid fraudulent insurance schemes.
The best way to avoid being scammed by a fake homeowners insurance agent is to know what to look for.
To make sure you’re getting what you paid for, let’s take a look at some of the tricks used by fraudulent insurance agents.
Homeowners Insurance Scams #1: Fake Brokers
Fake brokers are not insurance agents at all. They are just good at faking it. They don’t have a license to sell insurance, so they target people who are not likely to question or check their legitimacy.
A fraudulent broker will have fake documents that look genuine, so you need to research if the insurer they represent is real before you do business with them.
Homeowners Insurance Scams #2: Ghost Brokers
A ghost broker is a fake agent that applies for a homeowners policy for you. They take your premium payment and then cancel the policy without your knowledge. The premium goes into their pocket and you won’t suspect a thing.
Ghost brokers are usually found on social media sites where they advertise policies that sound great with lower-than-average rates. These online insurance scams have deceived thousands of people without being detected.
8 Telltale Signs of a Fraudulent Insurance Agent
Like every business, the insurance industry has trustworthy agents and brokers despite the increasing number of dishonest agents. It’s up to you to find out whether or not the agent you use is honest and legitimate.
Here are some things to look for:
- The agent pressures you into buying a policy: One of their favorite scams is to tell you “This offer is only good for two days, so don’t wait. Better grab it before it’s gone!” They text or call repeatedly asking if you have decided.
- They ask for payment upfront: Fake homeowners insurance agents ask for payment upfront. What you don’t realize is that they don’t forward the payment to the underwriter. This is known as premium diversion and it is a form of embezzlement. A legitimate agent doesn’t usually ask you to pay them directly.
- Low premiums that seem like a bargain: Although premium rates vary from one insurer to another, they are usually realistic. If you are offered a rate that is unbelievably low, you are probably being scammed.
- They include coverage you didn’t ask for: A good sign of an insurance scam is if the agent or broker includes coverage you didn’t discuss with them. They do this because their commission is based on your premium. If your premiums are high, the agent makes more. If the agent insists that you buy additional coverage you don’t want or need, get another agent.
- They don’t provide an address: Legitimate insurance agents will provide an address, phone number, and email address. If all the agent offers is a Facebook account or a personal phone number, look for another agent.
- The agent collects premiums for an insurer you haven’t heard of before: If your agent gives you the name of an insurance company you aren’t familiar with, trust your gut. Check with your state’s insurance department to find out if the agent is licensed.
- You weren’t provided a copy of the policy: With a legitimate agent, you should receive a copy of your policy within 30 days. Contact the insurance company immediately if you don’t receive your copy of the policy. A shady agent may be accepting premiums for a more expensive policy than he’s paying for and doesn’t want you to find out.
- The agent is hard to reach: A fake agent doesn’t want to get caught, so they don’t list their phone number. They may ask you to communicate by email or social media. This is a red flag. Time to look for another agent.
How to Verify the Legitimacy of an Insurance Agent
If your agent has caused you to question their legitimacy, the National Association of Insurance Commissioners (NAIC) recommends the following actions:
- Verify whether the agent is licensed in your state by contacting your state’s insurance department.
- Don’t make direct payments to an agent that only accepts cash.
- Unless you are 100% sure the agent is licensed, don’t sign anything.
- Avoid agents who don’t have a business address, phone number, or email.
- Research reputable insurance agents in your area.
Imagine what it would be like to file a claim, only to find out that you never even had a policy in place. Avoiding that scenario is worth the extra time it takes to verify your agent’s legitimacy.
Are You Worried About Homeowners Insurance Scams? Sandifer Insurance Is a Reputable Insurance Agency
The best way to avoid homeowners insurance scams is to talk with a reputable, established agency like Sandifer Insurance. We are a local, family-owned business and have proudly served customers in Cheraw, South Carolina, and surrounding areas for over 40 years.
We work with America’s top insurance providers to ensure that you get the right coverage at the best rates possible.
If you need homeowners insurance and are looking for a trustworthy agent, reach out to us by phone, email, or online today. Or, if you’re in the area, you are welcome to stop by our office located near historic downtown Cheraw, SC.