CAIF: Consumers Should Watch for Scams in 2005

Fake health insurance, insurance-agent scams and stolen airbags are among the eight insurance swindles consumers must watch for in 2005, the Coalition Against Insurance Fraud forecasts.

Insurance cons will reportedly remain widespread around the U.S. despite progress in cracking down on the crimes. Many scams persist year after year. They can steal from a few dollars to life savings. They also can threaten one’s health and even life.

Fake health insurance – Swindlers sell bogus health coverage to small
business owners and consumers. They promise discount prices and generous benefits – but later refuse to pay claims. One’s premiums are stolen, and they are forced to pay medical bills on their own. One’s health also can be jeopardized by delays in treatment. Action: Contact insurance department to ensure plan is licensed.

Airbag fraud — Crooked body shops remove deployed airbags from cars and fill the cavity with old rags or beer cans. Then they falsely bill one’s auto policy for a new airbag. One’s life is at risk without airbags, and their insurance is charged for expensive items they didn’t pay for. Action: Have outside mechanic inspect after repairs, or before buying a used car.

Stolen premiums — Most insurance agents are honest, but some take one’s premiums without buying coverage. The person has no insurance when making a claim for damage to their car, home or business. Action: Avoid writing premium check to agent. Call insurer to confirm being covered.

Churning — Agent convinces someone to use the built-up value of their whole life policy to buy a “better” policy they don’t need. One must start building up their policy’s cash value again. Seniors are especially at risk. Action: Get second opinion from financial advisor before buying.

Sliding — Agent secretly “slides” unwanted expenses into one’s policy, especially auto coverage. Their premiums can increase $100-$200. Motor club memberships and accidental-death coverage often are added. Action: Read policy and prices closely before signing. Never sign blank insurance form.

Staged accidents — Innocent drivers are maneuvered into car crashes,
sometimes at dangerous speeds. Crooks then make fake injury claims against the auto policy. Sometimes they suddenly brake so one rear-ends their car. Or they speed into one’s path when the individual pulls out of a parking space. Action: Never tailgate. Be wary of driver waving one out of parking space.

Windshield fraud — Cons offer to replace one’s windshield for free, even
when undamaged. Individual has a needless claim against their auto policy, and may have shoddy glass and poor installation that endanger their life. Crooks may also secretly make more claims against one’s policy. The cons approach people at car washes, gas stations and county fairs. Action: Just say no.

Viaticals — Consumers buy fake investments in life policies of people who are sick or dying. A crooked viatical firm promises one a payout when the policyholder dies. But the policies were obtained fraudulently, or never existed. One’s investment is void and their money is gone. Action: Avoid anyone promising guaranteed returns. Have financial adviser confirm plan is legal, and right.