Battling Insurance Fraud: These Scams Cost the Insurance Industry $200 Billion a Year - Don't Be a Victim

By Coward, Cheryl | Black Enterprise, March 1998 | Go to article overview

Battling Insurance Fraud: These Scams Cost the Insurance Industry $200 Billion a Year - Don't Be a Victim


Coward, Cheryl, Black Enterprise


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 neighborhood?" 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 e," 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. …

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