There’s an old saying- “If something is too good to be true, it probably is.”
Insurance is no different. In my many years (17 this year- yikes ;), I’ve seen a lot. A lot of scams and at bare minimum, some questionable practices. Next time you’re out “shopping” for insurance, here’s three warning signs to help you figure out whether you’re getting the real deal or the shaft.
Insurance Scams to Avoid #1- You’re asked for very little information, yet you get a premium pretty quickly.
I have yet to come across any insurance company that doesn’t require some basic information to get you a quote. If all you’re asked for is your name and address, yet the agent or company gives you a quick figure, they are MAKING IT UP. Insurance is so specific anymore. It is based on you and all your pertinent details. For auto insurance, the year, make, model, VIN and your driving record are a bare minimum for rating (here’s a post about what it takes to get you an accurate auto insurance quote). For a home, address, year of construction, type of construction, and replacement cost are extremely important (*shameless promotion alert- read about my book that painlessly walks you through how to insure your home).
Fact of the matter- if you get a premium lickety split and have provided virtually no information, well bully for you- you’re now in fantasy land. 20 years ago, yes, you could provide hardly any information and get a quote. Not now.
Insurance Scams to Avoid #2- Building off #1- the quoted premium is ridiculously low.
Although premiums are mostly specific to an individual, there are some generalities based on my experience. Examples:
- Your current auto policy annual premium is $1,000. The quote comes in at $300 for the year. Woah- something’s got to be wrong. Did a vehicle get left off? Did the coverage change? Maybe you’ve got $300,000 auto liability limit, and the quote is for state minimum (read- CRAPPY) limits. HUGE difference there folks. And yes, it can make a huge difference in premium. Or maybe the comprehensive & collision were left off the quote. Big deal there folks, especially if you need the comprehensive & collision.
- Your homeowners insurance premium is $1,200. The quote is $500 for the year. Hmmm…… perhaps you have a $500 deductible, and the quote shows $2,500. *Big difference alert* Perhaps the quote shows half the amount of coverage on the house that it currently has? If so, well then yes, you should have a HUGE difference in premium.
See where I’m going with this?
Insurance Scams to Avoid #3- You don’t ever get a policy, whether paper or electronic.
Every policy ever issued consists of a dec page + the contract. If you don’t get these, the agent took your money and spent it on something other than your insurance policy.
True story: A potential customer asked me to review his farm policy. I asked him for his current policy, so I could do my usual analysis. He replied, “I don’t have one.” I asked him, “What do you mean, you don’t have one?” He said he paid his premium, and every time he asked the agent for his policy (multiple times throughout the year mind you), he was given a variety of excuses, even “you don’t get a policy anymore.” Bullshit. The insurance policy is a legal contract. You’re obligated to get one. You keep getting excuses, you run the other way and find a different agent because I’d bet big money you “ain’t” got any insurance coverage.