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Avoiding Auto Insurance Fraud
The article refers to Texas but the lesson can be applied in most places.

Most Texas agents licensed to sell car insurance are honest and law-abiding. Each year, however, TDI revokes some agents´ licenses for stealing customers´ premiums or committing other fraudulent acts.

Here´s a scenario from TDI case files: A woman and her son paid a Houston agent $7,800 for full coverage of their new car and pickup truck. The woman received a temporary "binder" but received inadequate or no responses when she called the agent´s office to ask about her policy. TDI investigators found that the agent had stolen the woman´s premiums. The Commissioner of Insurance revoked the agent´s license, and a grand jury indicted him for stealing premiums paid by at least 30 customers.

Other deceptive agents have provided their clients with fake proof-of-insurance cards naming non-existent insurance companies or showing false effective dates. Selling or using a fake proof-of-insurance card is a crime in Texas.

In another scam, called "sliding," unscrupulous agents load unwanted and undisclosed coverages onto their customers´ auto policies. People pay $100 to $200 extra for motor club memberships, accidental death and dismemberment insurance and other coverages they didn´t want and didn´t know they were buying.

Defenses Against Auto Insurance Fraud

Deal only with reputable agents. Ask your friends to recommend agents they found helpful and reliable. Don´t let yourself be rushed. Give yourself time to shop.
Know what you´re buying. When you get a price quote, make sure the agent itemizes each coverage and its price. Look elsewhere if an agent claims to add "free" coverages to your policy.
Get a receipt for your premium and make a copy of the check or money order for your records. If you agree to an installment plan, get the paperwork to show how much you´re paying and for what.
Be suspicious if an agent bills you for future premium installments. Normally, an insurance company or premium finance will do this, not the agent.
Get and keep proof of insurance. In nearly every case, the agent should give you a binder, issued in the name of the insurance company, to show you are covered. Only a binder is evidence of immediate coverage. The company should send your policy and proof-of-insurance card within 30 days. The card must list the company´s name and toll-free number, your policy number, the make and model of your car and the dates of your coverage. A proof-of-insurance card listing only the agent´s name is not valid.
Don´t assume your policy is effective the same day you meet with and pay the agent. Check the binder to make sure

Source: The Insurance Information Institute. Click here to visit.

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