Business insurance

Beware of fake auto insurance policies


Besides night flight operators, pollution test centers have also been found selling fake policies to obtain other vehicle papers.

Most of the known insurance frauds usually involve the insurance company that is the victim of customer fraud. Telling a lie about your high blood pressure on a health insurance application form or allowing your garage to exaggerate the damage to your car from an accident on the claim form are common unethical practices. The insurance industry has suffered and it comes back to the roost in the form of higher premium rates for everyone in the long run.

Fraudulent documentation, misrepresentation of material facts, inflated claims, false claims and moral hazard (buying insurance under false pretenses in order to make a claim) are well-known insurance frauds. . More complex frauds involve buying multiple policies on a single asset, which is then destroyed to make a claim, policies being written on non-existent properties or overvaluing a property to allow for higher coverage and therefore a claim. higher.

In this column, let’s see examples of another type of fraud. How you, the insured, can be a victim of fraud or used to commit fraud against an insurance company.

Recently, a state police department exposed a bogus auto insurance racket. Members of the public are contacted by a call center claiming to be or representing leading insurers, and offered auto and health insurance. The premium is collected and fake policies are issued resulting in a double whammy for the “insured” who has lost their money to a fraudster and struggles with a worthless policy.

Even more interesting is a case where mobile pollution analysis centers sold bogus insurance policies to customers who contacted them to obtain a “Pollution under control” certificate. A valid auto insurance policy is required to obtain a PUC certificate, which is a must. Thus, false assurance is easily imposed on the customer at a convenient time, when they are unlikely to verify the authenticity of the transaction.

Another type of fraud has come to light: online insurance policy documents issued for motor vehicle liability coverage of a commercial vehicle, but at much lower rates by misrepresenting the vehicle category.

Distorted category

This “policy”, which contains correct information about the vehicle such as the registration number, with the exception of the vehicle category, is issued in collusion with the customer, who can use it to show that he is. complies with the Motor Vehicle Act and has TP coverage. This will help him get a certificate of fitness as the Road Transport Authority (RTA) systems are not tied to insurance and therefore the police cannot be authenticated.

A routine check by the traffic police can be easily handled with this document, but would be pointless if one is trying to make a claim on it. The repercussions here are terrible, as the actual victim would be someone else who was struck by this “insured” vehicle. Claims can only be made by or on behalf of the third party, who is affected (through personal injury, death or property damage) by the vehicle and there would be no insurance documents related to making a claim. .

We have only seen a few types of auto insurance fraud that you should watch out for. There are vulnerabilities in health insurance and even life insurance that border on identity theft. We will see them in the following columns, including how to protect yourself from them and avoid aiding and encouraging criminals, even if they are used without their knowledge.

(The writer is a business journalist specializing in insurance and company history)