Insurance Fraud

Beware of insurance scams

Insurance fraud has been around as long as insurance. It costs business billions of dollars each year - an expense then passed to consumers in higher premiums. While the elderly are the most vulnerable to fraud, scammers can be charming and aggressive to get you to give them money. Learn to identify potential fraud to avoid getting conned. The NAIC offers the following tips to protect yourself from becoming a victim.

What is insurance fraud?

Fake insurance companies or agents defraud consumers by taking money for premiums on bogus policies with no intention of paying claims. Scammers may offer policies at costs that are significantly lower than competitors’ prices. They might be difficult to reach by phone if there is even a listed phone number. Always find out if the seller represents a legitimate, licensed insurer before purchasing a policy. Your state insurance department can provide licensing information for a company or agent.

There are also legitimate, companies that sell non-insurance products marketed to look like real insurance. For example, an agent working for a company selling health discount plans might call the plan insurance when it is really an unregulated, non-insurance product. If you question whether a product is actual insurance, contact your state insurance department.

A dishonest insurance agent might collect premiums from a customer without reporting them to the company. The consumer believes their premiums are paid while the insurance company has no record of payment and cancels or does not renew the policy. If you do not receive an insurance ID card or a copy of your policy in a timely manner, check with the company to see if your premiums have been applied to your policy.

Fraud perpetrated by consumers

Consumers can also be guilty of insurance fraud. The most common forms of policyholder fraud are with auto insurance and workers’ compensation. Fraud is a criminal act leading to higher rates for all consumers. Deliberately staging an accident, exaggerating a legitimate claim or knowingly providing false information on an application are all examples of insurance fraud.

What can I do to prevent being a victim of fraud?

Stop. Call. Confirm. If you are unsure about an insurance company or agent, stop before signing any paperwork or issuing payment; call your state insurance department — easily reached by phone; and confirm the company or agent offering insurance is legitimate and licensed to sell insurance in the state. Taking precautions won’t bother honest agents and insurers.

If you believe you’re a victim of insurance fraud, or are aware of fraudulent activity, take action:

Who will help me?

Beyond your state insurance department, most states have special fraud bureaus that investigate insurance fraud. These bureaus take referrals and investigate cases from various sources, such as law enforcement agencies, insurance companies and consumer complaints. You could also call the state attorney general’s office.

More information

Insure U offers information auto, home, life and health insurance options, as well as tips for choosing the coverage that is right for you and your family.

About the NAIC

As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally. For more information, visit

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