Some insurance companies are scams, but it can be hard to tell which ones are reputable and which ones aren’t just by looking at them or perusing their websites.
Here are 9 Ways to Know if an Insurance Company is a Scam that will rip you off or put your life and property at risk.
1) The company is not licensed
The first tip-off that an insurance company might be a scam is when they are not licensed.
A legitimate business will have the proper licensing in order to operate.
If you’re not sure, you can always check with your state’s department of insurance or the National Association of Insurance Commissioners.
If the person at the other end of the phone won’t identify themselves:
If a representative from an insurance company won’t give their name and refuses to transfer you to someone else who can answer your question, then it may be time for concern.
Legitimate companies are happy to provide details about what they do and why. If there’s no office location:
While some insurance companies may only have a phone number as their contact information, this should raise flags for potential customers.
2) The company uses high-pressure tactics
The best way to know if you’re dealing with a scam company is by staying calm, and asking for time (usually at least 10 minutes) for you to do your research.
If the agent gets pushy or makes it seem like you have no choice but to sign on the dotted line right then and there, chances are they’re trying to pressure you into something they know isn’t in your best interest.
A lot of times, when people call about getting insurance quotes over the phone, agents will use what’s called salesmanship in order to close the sale – meaning they will say anything that needs to be said just to get you off of the phone.
The goal here is to make you feel like signing up is your only option so that they can earn their commission and move onto their next victim.
None of these statements should make you feel pressured into signing anything that day.
3) The company doesn’t have a physical address
A scam insurance company will never have a physical address and may not even have contact information.
A legitimate insurance company will have a physical address where you can go to pick up policies, obtain quotes, speak with customer service reps, or ask for assistance.
The only way you’ll be able to contact them is either by phone or email. They use teaser rates.
One of the telltale signs of a scam insurance company is that they offer very low teaser rates for their premiums.
4) The company doesn’t have positive customer reviews
The best way to know if an insurance company is legitimate or not is by reading the reviews from their customers. If they have no reviews, then it’s possible that they are a scam.
Be sure to look at the number of negative reviews and compare it with the number of positive ones.
If there are many more negative than positive reviews, this could be a sign that something shady is going on.
5) The company’s website is unprofessional
If the company’s website seems unprofessional, it might be a sign that they’re not legit. In this case, you should do your research.
Find out how long they’ve been in business and what their reviews are like.
If they don’t have reviews or they haven’t been in business for very long, then that’s another sign that you may not want to deal with them.
It also pays to look at their claims process.
For example, does the company charge an up-front fee for services? Is there a cap on benefits?
If you know someone who has dealt with this insurance company before and had bad experiences, it’s worth asking about their experience.
Finally, watch out for any hidden fees! For example, will you have to pay extra just because you live in a certain area?
6) The company uses fake quotes
Insurance companies are notorious for using fake quotes, which can make it difficult for you to know whether or not they are legitimate.
To avoid being scammed, always request the insurance company’s license number, and check with your state insurance commission.
If that doesn’t work, search the company’s name on Google to see what comes up.
You’ll want to look for reviews from other customers and any other information you can find about them before making a decision about whether or not they are legitimate.
7) The company refuses to provide proof of insurance
There are many different ways that you can tell if a company is trying to scam you.
One of the most common signs is when they refuse to provide any proof of insurance.
A legitimate insurance company will not have any problem letting you know who your provider and coverage are, so always make sure that this information is available before giving out any personal details.
The company asks for credit card information:
Another sign that something might be up is if a business starts asking for your credit card number.
Legitimate businesses will never ask for this type of payment upfront and will instead wait until after you’ve made a purchase or received services in order to charge you properly.
8) The company promises unrealistic discounts
When you’re shopping for insurance, always look at the fine print.
A great way to know if the company is trying to take advantage of you and your money is by looking for unrealistic discounts.
For example, some companies will promise that they’ll provide coverage with zero deductible or even no out-of-pocket costs.
While this sounds like a good idea at first glance, it’s actually only advantageous for the company not you because they won’t have anything invested in making sure your house doesn’t get damaged.
They don’t need to care about your property because they just want your business for one year so their prices are cheaper than the other guys.
In reality, these companies have created a loss leader which means that they’re using their products as bait to lure you into buying other things from them.
Like higher priced items with huge deductibles so when there are multiple claims within one year then they profit.
9) The company’s employees are not knowledgeable
The company’s employees are not knowledgeable. Before you sign any contracts, do your research to make sure the company has been in business for at least five years and has a positive online reputation.
If someone doesn’t know about the company, it might be because they’re new or unestablished.
If there are warning signs that point to potential fraud—i.e., no physical office address listed on the website—move on to another insurer before it’s too late.